NEWS ARTICLE
August 10, 2010
The New York Times, "Wells Fargo Loses Ruling on Overdraft Fees"
A federal judge on Tuesday ordered Wells Fargo to pay California customers $203 million in restitution for claims that it had manipulated transactions to maximize the overdraft fees it charged. Instead of processing transactions in the order in which they were received, Wells Fargo put through the largest to smallest, a judge in San Francisco found. In a stinging 90-page opinion, United States District Judge William Alsup wrote that the practice was unfair and deceptive. The judge also accused Wells Fargo of going "to lengths to hide these practices while promulgating a facade of phony disclosure." For instance, he said that customers had learned about the change in how Wells Fargo processed transactions only after they complained about it.
"The bank's dominant, indeed sole, motive was to maximize the number of overdrafts and squeeze as much as possible" out of customers who spent more than they had in their accounts, the judge wrote. The ruling comes after a two-week trial in the spring heard by the judge. Wells Fargo, which collected nearly $1.8 billion in overdraft fees in California alone from 2005 to 2007, said it would appeal.
The judge's ruling could portend problems for other banks that are defendants in similar cases. Other federal lawsuits regarding overdraft fees have been consolidated into one class-action suit in Florida, which also claims that Wells Fargo and other banks manipulated transactions to maximize overdraft fees.
Read the full story on the New York Times website.
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