NEWS ARTICLE
August 11, 2010
St. Petersburg Times, "Why $30 overdraft charged for $2 cup of coffee bought by debit card still raises legal stink"
Wake up and good morning. All those complaints by bank customers that their financial institutions gouged them by ordering account overdrafts to maximize fees may now be reaching a tipping point. Federal lawsuits regarding overdraft fees now consolidated into one class-action suit in Florida this week were given a legal road map by a judge's ruling in a related case in California.
Various lawsuits claim that big banks -- including Bank of America, Citibank, JPMorgan Chase, U.S. Bank, Wachovia and Wells Fargo (which now owns Wachovia) -- manipulated transactions to maximize overdraft fees. In California on Tuesday, a federal judge 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. As reported by the New York Times, instead of processing transactions in the order in which they were received, Wells Fargo put through the largest to smallest, U.S. District Judge William Alsup in San Francisco wrote in a stinging 90-page opinion, calling the practice unfair and deceptive. Said Alsup:
"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."
Wells Fargo collected an astonishing $1.4 billion in overdraft fees in California alone from 2005 to 2007. The bank said the ruling was inaccurate and plans to appeal.
Read the full article on the St. Petersburg Times site.
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