Consumer Fraud:
Is your bank charging unfair or deceptive overdraft fees?
Unfair Overdraft Protection Fees Details
- This Alert Affects: Consumers who have been charged overdraft fees to cover debit card purchases or checks written when there were insufficient funds in their accounts.
- Damages: Overdraft fees are incurred on each purchase made, so they can add up quickly and leave customers with a large debt to repay. Complaints have also alleged that banks manipulate the order of a customer’s transactions in order to make them incur the maximum number of overdraft fees, thereby further increasing the bank’s profits.
- Company(ies): Not Applicable
- Additional Details: Many banks automatically enroll customers in overdraft protection plans, so customers may be unaware of the consequences of making a purchase when there are insufficient funds in their accounts. In addition, the overdraft fees may be disproportionate to the amount of the purchase. For example, a $4.00 purchase may incur a $35.00 overdraft fee.
- Date: In 2009, complaints have been filed against several banks regarding their overdraft protection policies.
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Unfair Overdraft Protection Fees Lawsuits
A recent series of lawsuits against the giants of the banking industry allege that consumers are being victimized by unfair and deceptive practices regarding overdraft protection fees.
Many banks automatically enroll their customers in overdraft protection plans, touting them as providing peace of mind and convenience. In theory, these plans protect consumers by providing that the bank will not refuse a check or debit card transaction for insufficient funds. This service can save consumers from embarrassment, inconvenience, and in some instances, even criminal prosecution. Of course, these plans are not free – typically the bank will charge a customer around $35 or so per transaction.
According to complaints filed against Bank of America, Citibank, Wells Fargo, Chase, and others, the peace of mind and convenience provided by overdraft protection plans comes at a heavy price. These complaints allege that banks have purposively set out to maximize the amount they can charge their customers in overdraft fees. For example, the complaints allege that rather than reject repeated debit card transactions at the point of sale, banks intentionally allow customers to continue using their debit cards even though they have a negative balance. According to consumer complaints on line, this results in seemingly minor transgressions ballooning into a financial catastrophe, like a $25 stop at a fast food restaurant followed by a tank of gas and a few dollars at the convenience store resulting in almost $100 in overdraft fees. Other consumers say one mistake has caused an entire weekends’ worth of spending to come with a $35 or more per transaction add-on by the bank.
The complaints also allege that banks will “re-order” a customer’s transactions so as to inflate the amount owed in overdraft protection fees. This means that if a series of debits comes into the bank on a particular day, the bank will process the largest debit first no matter when it occurred that day. So, take a customer with a $100 balance who makes four $25 debit card purchases in the morning and then a $50 purchase at night. Rather than charge only one overdraft fee for the $50 evening transaction, the bank will debit the $50 transaction first and charge overdraft fees twice for two of the $25 morning transactions.
Some banks have announced changes to their overdraft protection policies in response to the recent lawsuits filed against them. However, many other banks are continuing with this practice and have no plans on stopping any time soon. If you believe you have been the victim of one of these practices by your bank, we would like to hear about your experience. You may be eligible to participate in litigation against your bank and recover compensation. Please complete the form below with your information and you will be contacted by one of our legal representatives as soon as possible.
For more information, please review the following articles:
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Citizens Bank is horrible. I had made 13 debitcredit card transactions which came out of my account yesterday. I checked online and there was not one pending all had been debited at that point. Overnight 2 checks came through one of which would have cleared one of which would have caused an overdraft. What Citizens did was put back in all 13 debitcredit card transactions then proceeded to debit the larger check first then the second check then the 13 debitcredit card transactions which thereby caused 13 overdrafts At 39 each I am now being charged 507 in overdraft fees This is so unfair...and I dont understand for the life of me how they could have shown the debitcredit card transactions debited then they put them back IN to debit the checks first Something needs to be done about banks being able to do this...
sheila (2/13/10):
suntrust . . . I opened the account over 35 years. An auto draft comes out each month of 92.69 for comcast cable has been for 8 years. comcast took out 225.00 an incorrect amount. It would have cleared if it had been the correct 92.69. The bank paid 225.00 there were 3 more charges that came thru on the same date 2 for under 10.00 and 1 for 17.00 so I had 4 35.00 fees . . . they paid the largest 1st in order to charge 3 additional fees instead of 1 fee. The next day I deposited money not knowing my account was in an overdraft status. So I used my debit card some more thereby starting the vicious cycle over again. I called the bank to ask what 225.00 was for they said comcast. I told them the amount was incorrect they told me to call comcast...they never called me backafter many attemptsI called Suntrust they emailed me a complaint form told me to go to the branch where I opened the account to get my overdraft fees back. The branch faxed the form back for me and said I would get the overdraft fees back. I did not. . .I called the same dept. and they said they were not giving back the charges because I had done business with comcast before. The funny thing was one of the options on the forms was I have had autodrafts from this merchant before but the amount was incorrect this time. I pointed out they had paid the larger items 1st in order to collect more fees. Their response was we pay the largest lst in case its your mortgage or car payment. I laughed said nobody has a mortgage for 225.00 these days nor a car payment for that matter.I said besides you know the names of the merchants that you are paying they dont ask for payment without a name. I was given the run around. I have an automatic deposit that comes to my account every month. So this month my mortgage came thru on the 2nd the deposit came thru on the 3rd they were going to return the mortgage draft but I saw the 35.00 fee asked them what it was for. They told me my mortgage. Do you see the irony . . . they had just racked up my account with 500.00 worth of overdraft fees extended continuous and any other name they could think to call them. When I ask them to pay my mortgage the response was I dont think we can do that. He wouldnt say that there policy was to pay the largest amount lst in case it was the mortgage or car payment until I said that I had been recording the conversations with SUNTRUST for over a week per my attorneys instruction. Then he changed his story said . . . mortgage car payment. He said hed have to get special permission to pay it. Well they did. They manipulated the way in which to pay the items to rack up more fees UNBELIEVABLE
Marjorie (2/5/10):
WACHOVIA has charged my account 1740 in overdraft fees since 609. Holds are placed on small debit card charges when a large check is presented they then add in the 5.00 or less charges so they can slap a 35 fee on each charge. After repeated pleasto delete overdraft protection which I did not authorize WACHOVIA continues wthese unfair fees. When asked why they continue I am told that the bank is working on changing these unfair practices.
melissa (1/26/10):
Bank of America charges overdraft fees on the account available balance instead of the actual account balance. This has cost me 420.00 since Dec. 1 2009. I have not had time to go further back into last year for additional charges but this happens two three times a month and it is 35.00 per overdraft item. I wish that someone could stop this corporate giant in its tracks.
Geraldine (1/21/10):
i think all banks need to be held accountable for these excessive charges to the consumer...enough is enough.
P.L.Patton (1/20/10):
Bank of America continues to apply creative accounting practices by showing minor ATM charges as pending waiting several days until a larger item or check comes in then overdrafts the large item first causing all the smaller ATM charges to all overdraft. The effect has been an average of 250350 per month in overdraft fees Total unethical practices.