Unfair Overdraft Banking Practices

Overdraft fees are considered a common way for most financial institutions to make revenue. In 2015 the top 3 big banks grossed over 6 billion in revenue from ATM/debit card overdraft fees.  Prior to 2010 most customers were enrolled in overdraft protection without their knowledge. With the rising use of ATM/debit cards the banking industry found a way to exploit and make a fortune off of their customers in overdraft fees. Many banking customers were automatically sign up for overdraft protection, and assumed if they used their ATM/Debit cards and had no funds in the account, it would not be approved. This was not the case, when opening up a bank account they were signed up automatically with overdraft protection.  Not reading the fine print on their bank account agreements they did not opt out for the overdraft coverage, and many were surprised when they found out that they had been charged overdraft fees for funds they may or may not have had available.  For years banks got away with manipulating the way transactions were posted on a customers account. Most banks posted transactions from highest amounts to lowest amounts and then posted deposits last, causing many accounts to be overdrawn and allowing the bank to charge overdraft fees.

Example:

In the morning 9am you make a cash deposit of $500.00 the next day you go to the store and spend $10.00, through out the day you make 5 other $10.00 dollar purchases and then you make a $200.00 purchase. You had deposited $500.00 cash so you had the funds but the bank manipulate the transactions posting by lowest to highest order with the deposit last:

$10.00 overdrawn fee charged $35.00

$10.00 overdrawn fee charged $35.00

$10.00 overdrawn fee charged $35.00

$10.00 overdrawn fee charged $35.00

$10.00 overdrawn fee charged $35.00

$10.00 overdrawn fee charged $35.00

$200.00 overdrawn fee charged $35.00

——————————————–

$270.00 Purchases    Fee’s charged $245.00

$500 Deposit less amount of fees and total purchases you now owe the bank $15 dollars instead of still having a remaining balance in your account of $230.00

 

This banking practice lead to customer accounts being overdrawn, and allowing the bank to charge the most overdraft fee’s possible. Since the banking industry was not clear about their overdraft protection fees customers began contesting this banking practice.  Many banks were called into question regarding their overdraft banking practices and in 2010 the federal government stepped in, and set forth regulations regarding the banking industry’s overdraft protection policies.

This policy requires banks to disclose their overdraft protection policies stating “Marketing must not be unfair or deceptive to consumers, and should provide consumers with timely, clear, accurate, and balanced information that will promote informed decision making.” This policy allows consumers to opt in to overdraft protection plans instead of having to opt out of them.

Banks are now required to disclose to you their policies regarding deposits to avoid these overdraft occurrences, make sure you read the fine print when banking. If you feel your rights have been violated by the banking industry please Contact Us and provide any details along with contact information. If you prefer to leave a voicemail you can call 1.858.236.9020. GetClassActionMoney.com can then forward these requests to our network of attorneys that may contact you if a Class Action Lawsuit is to be pursued. In addition make sure you Subscribe to our mailing list to receive important updates regarding class action news and open cases.