Lawsuit Alleges Wells Fargo Uses Internet to Promote Discrimination
In a new twist on a familiar allegation against home lenders, Wells Fargo & Co. was accused Wednesday of using the Internet to discriminate against minorities and encourage racial segregation.
The allegations center on Wells Fargo’s “Community Calculator,” an online search tool designed to help prospective home buyers shop for suitable neighborhoods.
The problem, according to an amendment to a civil lawsuit in Dallas federal court, is that San Francisco-based Wells uses racial descriptions to categorize neighborhoods depicted as downtrodden areas.
The suit also alleges that the site steers “residents of predominantly minority ZIP Codes to other predominantly minority ZIP Codes.” The site also funnels residents of white neighborhoods to other white neighborhoods, the suit alleges.
Wells’ Internet descriptions include “low-income” neighborhoods, where 86% of the residents are blacks who “tend to purchase fast food and takeout food from chicken restaurants.”
Another category is “Middle Class Urban Families,” where 90% of the residents are black and wine coolers are popular. The Community Calculator identifies another low-income neighborhood category as “West Coast Immigrants,” where 70% of the population is Latino and speaks Spanish at home.
In a sample submission made by the Associated Press on Wednesday, these three categories also appeared next to “distressed neighborhoods,” where 40% of the residents receive some type of public assistance and 25% are unemployed.
“They are including some of the worst racial stereotypes possible,” said Michael Daniel, a Dallas attorney who filed the suit on behalf of the Assn. of Community Organizations for Reform Now, a nonprofit group.
In a statement, Wells said that the bank is only trying to help home buyers find the right place to live.
The Community Calculator “is designed to help customers make informed buying decisions using criteria such as education levels, housing characteristics, household by type, crime index and population,” Wells said. “The Community Calculator is not designed to use race as a tool to guide home buyers’ decision making.”
Wells declined further comment until its lawyers reviewed the suit.
The suit, alleging violations of the Fair Housing Act, seeks a court order that would force Wells to remove the racial descriptions from its Web site and grant “any other appropriate relief.”
ACORN alleges data filed with federal regulators show that Wells’ mortgage unit, previously known as Norwest, compiled an abysmal lending record to minorities.
An ACORN member, Ruth Isaac of Dallas, first filed suit against Norwest in April because of statistics showing the mortgage lender made only a handful of home purchase loans in black and Latino neighborhoods from 1996 to 1998.
Daniel amended the suit Wednesday to include ACORN, which has 125,000 members, as a plaintiff and introduce the allegations that Wells is using its Web site as a discriminatory tool.