Excessive Bank Overdraft Fees
Customers of banks across the country are finding themselves hit with excessive bank overdraft fees. Sometimes, banks will misrepresent the rules about overdraft fees to customers in an effort to collect on overdraft fees. Some banks have even been accused of using illegal business practices to help ensure that customers using ATM or debit cards will overdraw their accounts and be assessed overdraft fees. If you have been the victim of excessive bank overdraft fees, contact Sokolove Law today for a free consultation about whether a bank overdraft fee lawsuit is right for you.
Banks Are Settling Class Action Overdraft Fee Lawsuits
According to Reuters, JP Morgan Chase Bank joined Bank of America and several smaller banks in settling a national class action bank overdraft fee lawsuit for $110 million. The banks were able to charge excessive overdraft fees because of a system they devised where transactions are processed by dollar amount — largest to smallest — rather than by date and time. This causes account balances to fall faster and enables overdraft fees to accumulate. Plaintiffs in the bank overdraft fee lawsuit argue that this singles out bank customers with lower incomes and balances for excessive fees.
Bank Overdraft Fees Regulations
As of July 1, 2010, banks are required to ask new customers if they wish to enroll in "overdraft protection." That same law extended to existing bank customers on August 15, 2010. There is no legislation, however, to control the amount of money charged for overdraft fees. This way, even if a customer's balance falls below by $1, a bank can charge $35 for the overdraft fee.
According to the lawsuit, one of the most problematic and confusing aspects of bank overdraft fees for customers is that customers assume the bank will simply decline a purchase if there is not enough money in the account to cover it. Customers argue that they never asked for overdraft protection, so they don't want the bank to overdraw their accounts and then charge a fee for it. Once customers are in overdraft, the fees just continue to accumulate. If a customer is in overdraft without knowing it, he or she will continue to make purchases, being charged another overdraft fee for each purchase, pushing them deeper into the red.
Should You Pursue Legal Action for Excessive Bank Overdraft Fees?
Lawsuits against banks that charge excessive bank overdraft fees have been filed and settled against many banks, including Wells Fargo, Chase Bank, Bank of America, M&T Bank, and Wachovia. The lawsuits all state that banks charge compounding, excessive overdraft fees when customers' accounts go into negative balances. They also state that the banks use unethical and even illegal practices to push their accounts into overdraft. For example, some lawsuits have alleged that banks have routinely misrepresented customers' account balances as well as reordered debits and credits to accounts in a way that would quickly drain their balances.
If you or someone you know have been the victim of excessive bank overdraft fees, call Sokolove Law today for a free legal consultation.
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