Wells Fargo loses ($203 million) debit card suit

[Newsjock]

Source: Bloomberg News

Wells Fargo & Co. should pay about $203 million to customers who claim the bank manipulated debit card transactions without their knowledge to increase revenue from overdraft fees, a federal judge ruled.

U.S. District Judge William Alsup in San Francisco issued the ruling Tuesday, deciding the case without a jury.

... Customers don't "reasonably expect that they will have to pay up to ten overdraft fees when only one would ordinarily be incurred," Alsup wrote in the opinion. The multiple fees are "so pernicious," he said, that they should only be allowed if customers expected them and in this case "the proof is the opposite."

Wells Fargo "went to great lengths to bury the words deep in a lengthy fine-print document and the words selected were too vague to warn depositors, as even the bank's own expert conceded," Alsup wrote.

Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/08/11/BU4C1ES0MU.DTL&tsp=1

[tridim]

1. Chase did the same to me.

Raised my minimum payment while I was paying off the balance with monthly on-line payments. I only owed about $300 while I was paying it off, and now I owe about $700.

Does this ruling affect other banks that did the same thing?

[dkf]

2. All disclosure docs have page after page of irrelevancies with only a few

Points worth noting. Didn't they standardize this in the reform bill?

[Warpy]

3. They're not the only ones, either

It seems like most of the banks out there look over the daily charges and if somebody makes a big purchase late in the day after a bunch of small ones and goes over the limit, they'll post that big purchase first so that they've got more small purchases to charge multiple overdraft fees on rather than charging just one fee for the big purchase that did the actual damage.

This is a fairly universal practice and it applies to checks as well as ATM purchases.

Banks are paying back their TARP loans mostly out of increased fees on the backs of small depositors.

[BrklynLiberal]

7. Exactly right. I have seen it on my checking acct at TD bank,

[formercia]

9. That's why TD (Toronto Dominion) has had the resources to buy up other banks.

They are expanding their kingdom on the backs of their customers.

[BrklynLiberal]

15. I have wondered what thew TD was for. When I opened my account it was Commerce bank.

[Lightning Count]

14. No good solutions.

I would rather my mortgage payment that I paid at the end of the day be paid then the redbull, happy meal, and bubble gum I purchased earlier that day. Same goes for my electric bill.

[SOS]

4. As of Sunday August 15

You have the right to get that "debit bounce protection" scam off your account.
March in to your bank on Monday and tell them to remove it!!

What a pleasure it will be to tell that nasty bank manger who cleaned me out of $245 based on one "uncollected" check that her days of ripping me off are over.

[BulletproofLandshark]

6. It ends automatically on the 15th.

At least at my bank. They keep sending snail mail practically begging me to opt-in to their "bounce protection" scam. They are desperate to keep this revenue stream going.

[Massacure]

31. The legislation only allows overdraft protection if customers opt-in.

I remember reading that banks are not allowed to offer it as the default option.

[florida08]

5. you gotta watch these guys

My mortgage is with WF. I began paying double payments about a year ago online. Low and behold they were subtracting interest for the next month instead of applying it to my principle. In shock I wrote them and told them that if they didn't fix it I was going to report them to the Fed. Explained in length how they're suppose to handle overpayments. Finally got an email back saying they were sorry..uh huh sure..and that the interest withdrawel would now be applied to the principle. They did. I have a visa that was from Wachovia but is now in their hands too. I watch for when payments are posted and give them ample time. They use slowness to claim a late payment. Don't let them.

[RobinA]

11. I Noticed

Wachovia using slowness as well. Took DAYS for them to post a mutual fund redemption from another company, and that's after the mutual fund company posted it. Where was my money, or I should say, my electronic funds, for FOUR days? Then once it posted I paid off a big loan and it took DAYS to leave my Wachovia account. This two-move transaction took a week and a half, all done electronically. Imagine if I had assumed the money moved when the mutual fund said it did? I'd be in fees out the wazoo.

[florida08]

17. oh yeah

Don't trust them either..but that's ridiculous. They sure didn't want that loan to be paid off..jerks.

[jayfish]

28. They Got Check 21 Passed Though.

You know, the one where they get to debit the money from you account the second you sign a check? Banks and bankers are the lowest form of scum.

FSH

[Gamey]

8. Two words: credit union

[petersjo02]

10. Two more words

Hear, hear!

[Blue_Tires]

16. +1

[jayfish]

26. I Keep Hearing This Over And Over And Over.

It's just like the "Get a Mac" meme. Thing is my credit union is just as bad as the bank practices I read about.

FSH

[DatManFromNawlins]

12. Texasbank did the same to me

They sent me an incorrect balance slip when I was living paycheck to paycheck, just having moved to a new city, and they hit me with $400 in overdraft fees for purchases like a bottle of water or a hamburger. That was fun.

[anigbrowl]

13. This is more significant than it looks, in two ways.

1. this is a private class action rather than a governt suit against WF. IIRC it began before Obama took office actually. So if you were a Wells Fargo customer in the last few years you will probably get some money refunded as part of the sttlement. It won't be too much, because they have 48 million customers and many of them will be eligible for a slice, and because the lawyers and initial class members will get about 40% of the amount. And it won't be too soon, because the decision will be appealed. But chances are they will lose the appeal (Alsup is a pretty experienced judge and IMHO the plaintiffs had a good case) and then...

2. there is a much, much larger class action suit in Florida involving a bunch of the major banks as well as WF - BofA, Wachovia, Chase, I forget who else right now. That lawsuit has been on hold pending the outcome of this case (which I think was filed first), but concerns substantially the same matters. Not only are there more banks involved, but the amount sought by the plaintiffs is also much higher. There's a high probability that the case will go the same way, as most of the major banks were employing the same policy for the same reason and even levying the same $ amount in fees...which means that THAT case may well be followed by an antitrust investigation.

[grasswire]

18. Judge orders Wells Fargo to pay $203 million in overdraft fee suit

Source: The Oregonian

By Brent Hunsberger August 10, 2010; in the print edition August 11.

A federal judge in California today ordered Wells Fargo Bank to pay $203 million to consumers who overdrew their checking accounts and got hit with larger fees than they should have because of the way the bank reordered their transactions.

U.S. District Judge William Alsup found the bank engaged in unfair and deceptive practices, in violation of state law, with a practice called "high-to-low resequencing." In general, when a customer overdrafted their checking account, the bank reordered a batch of debit charges from highest to lowest, resulting in multiple overdraft charges instead of just one. Each fee ranged from $22 to $35.

In addition to requiring Wells Fargo to pay $203 million in restitution, the judge also ordered the bank to stop the practice by Nov. 30.

Read more: http://www.oregonlive.com/business/index.ssf/2010/08/judge_orders_wells_fargo_to_pa.html

[grasswire]

19. it's a start

Power to the people!

[EFerrari]

20. Thanks so much for this!

:kick:

[grasswire]

22. link to the 90 page decision

http://www.oregonlive.com/business/index.ssf/2010/08/judge_orders_wells_fargo_to_pa.html

[grasswire]

21. what the judge said

His order is, at times, scathing, saying "gouging and profiteering were Wells Fargo's true motivations behind the high-to-low switch" and that its "neat tricks generated colossal sums per year in additional overdraft fees, just as the internal bank memos had predicted."

[Lydia Leftcoast]

23. Citibank did that to me

My checking account with them was down to double digits, but I had enough in it to cover a certain check--or so I thought. I got an overdraft notice.

When my statement came out, I found that Citibank had subtracted $15 of unexplained "miscellaneous fees" from my account TWICE. Then they added overdraft charges.

I paid the overdraft charges and closed my account. They still send me offers in the mail. AS IF!

[EFerrari]

24. BofA, WaMu. I told my mom that this would come back to bite the banks

years ago when they first started this practice. God knows how many millions they made on the backs of working people. :grr:

[qb]

25. Ha! Take that, ya bastids! I recently won a $700 small claims case against Wells Fargo

over their fucked-up overdraft system.

[grasswire]

32. do tell us more

a lot of people would like to follow your example

[qb]

33. I took the advice of a Chicago columnist and filed in conciliation court.

(sorry, I lost the link)
The grounds for suing are this: I did not sign up for the system that automatically covers an overdraft and charges a $35 fee.

Here's the story:

I foolishly wrote a check a couple of days before payday, assuming it would take a couple of days to clear. It cleared the next day and triggered a cascade $35 fees for small debit-card transactions already in the system. I attempted to make deposits to cover the fees, but the fees ate up my deposits faster than I could make them. Final damage: $630.
I kept a record of my phone calls, e-mails, and letters to customer service alerting them to this outrageous penalty and requesting a portion be credited back to my account. Each time they said "no way".

I downloaded a conciliation court form, filled it out, and filed it with the $70 fee. I showed up in court. Wells Fargo did not, and I won by default (I was awarded $630 + my $70 filing fee). I think winning this by default was an anomaly... I listed the downtown branch nearest the courthouse as the defendant, and someone there apparently lost the summons. However, I think the grounds are reasonable and a judge will more likely than not rule for an individual rather than the corporation.

The Chicago columnist said that Wells Fargo actually settled with him rather than waste their time in court.

[Romulox]

27. So...ultimately U.S. taxpayers are paying this fine, right?

:shrug:

[anigbrowl]

35. No, Wells Fargo paid off their TARP loan last December

http://www.marketwatch.com/story/wells-fargo-repays-tarp-funds-2009-12-23

The warrants referred to are options to buy WFC stock at a fixed price later if the government wants to (ie once their price goes over $35 the govt could buy 110 million shares of WFC for less and then sell at a profit to the taxpayer).

[Romulox]

36. So...US taxpayers are only *implictly guaranteeing* to pay the fine, then?

It's ridiculous to pretend that having the US as a backstop and guarantor doesn't add to the value of a bank. But you knew that, right? :hi:

[NikRik]

29. They got me once !

To my shock I went to oline banking to view my Wells Fargo account and I had a $35.00 over draft charge over a $5 debit card use.I went into Wells Farge and quickly paid the $35.00 Fee and deposited a small amount of $ into the account . Iam unemployed so I really only use the account for a re-occuring pay out for my ISP. Well I went back online to check my account again and Wells Fargo took out a monthly service charge and my re-occuring ISP was paid and perhaps one small purchase ,less then $10.Due to the Wells Farge $5 monthly service charge it put my account back into over draft again ,once again a $35 over draft charge due to a $5 shortage ! At this point I was very angry and called their customer service.To my surprise they not only waved the over draft charge they put the $35 back in my account from the first over draft ! Sorry my exprience has been that Wells Fargo treats its long time customers pretty good
NikRik

[jayfish]

30. Sure, They Will Do That For You One Time.

Try it again and see how willing they are to do the same.

FSH

[defendandprotect]

34. Unregulated capitalism is merely organized crime . . .

[PA Democrat]

37. Thanks for posting. My son experienced the same thing with PNC Bank.

and you would not BELIEVE the creative accounting the bank used to charge over $200.00 in fees for an $11 overdraft. He should have paid ONE OD fee, but they managed to hit him with seven, by charging six separate OD fees on just 3 debit card transactions.

They charged him for an OD when a memo debit for the bank card transaction posted to his account on the day of the purchase, then another OD when the same item was actually settled three calendar days later. He realized his error on the day that he saw a forgotten purchase hit his account, and transferred money and thought he had the problem covered, but the bank somehow managed to hit him with another six OD charges.

The bank wouldn't even talk to him. He's a poor college student. When I called the manager since I am co-owner of the account I learned that their customer online banking system balances are different from their own internal accounting balances that they use to rack up additional OD charges. I was livid.

End of story the bank manager eventually agreed that one OD fee was fair and reversed the other six (after I threatened to close more than 10 other accounts we have at the bank). I plan to gradually move everything out of PNC Bank. It's galling to think that my tax dollars bailed their thieving asses out.