NEW YORK (Reuters) - Wells Fargo & Co has been hit with a lawsuit by a Texas jewelry company accusing it of encouraging thousands of retailers nationwide to charge hidden fees to customers using financing programs created by the bank.

FILE PHOTO: A Wells Fargo Bank is shown in Charlotte, North Carolina, U.S. on September 26, 2016. REUTERS/Mike Blake/File Photo

Then lawsuit, filed on Thursday in San Francisco federal court, said retailers were told to build financing fees into the price of goods and advertise that purchases could be financed interest-free. In reality, the higher purchase price amounted to a hidden, double-digit interest charge, the lawsuit said.

It alleges violations of the U.S. Truth in Lending Act, which requires lenders to clearly disclose financing charges. The complaint was filed by El Paso, Texas-based J Edwards Jewelry Distributing and its president, John Silverman, as a proposed class action on behalf of over 5,000 retailers nationwide.

Wells Fargo spokeswoman Hilary O’Byrne said the bank has received the lawsuit and is reviewing its claims but cannot comment further on pending litigation.

The finance programs went by such names as Wells Fargo Jewelry Advantage or Wells Fargo Home Projects.

The fourth-biggest U.S. bank, Wells Fargo has also been grappling with a sales scandal involving unauthorized accounts. In April, it agreed to pay $1 billion to settle regulators’ allegations that it forced unneeded auto insurance on consumers and charged homebuyers excessive fees.

Thursday’s lawsuit said the financing programs were advertised at retailers’ stores and on their websites, but Wells Fargo controlled how merchants could describe them. Retailers were told they could not charge a fee for customers using Wells Fargo financing but could inflate a purchase price to cover the fees, the lawsuit said.

In a typical purchase, a customer might pay $3,000 for a ring and zero interest if the full amount was paid within 60 months, the complaint said. The retailer forfeited 22.5 percent of the cost to Wells Fargo in exchange for the zero percent financing, the lawsuit said.

Customers could buy the same ring for just $2,325 if they paid in cash, saving $675, the lawsuit said. Customers using Wells Fargo financing were thus paying $675 in undisclosed finance charges, it said.

Wells Fargo likely collects as much as $800 million a year in hidden finance charges through the programs, the lawsuit said.

Because finance charges were built into a purchase price, the lawsuit said, retailers also had to remit more sales taxes to local governments than they otherwise would have.

The case is Silverman et al v Wells Fargo & Co, U.S. District Court, California Northern District, No 18-3886