Finance Globe

U.S. financial and economic topics from several finance writers.
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Class Action Lawsuit for Many Overdraft Victims

This situation may have happened to you: Your bank account is running low, but you have certain purchases you must make. So, you cleverly make your transactions in such a way that, when they’re posted, you’ll only overdraft the final one or transactions, thereby minimizing your overdraft fees.

Unfortunately, you may have been among the many consumers who found out the hard way that outsmarting the bank is tougher than that. Did you check your account the next morning only to see that the transactions posted to your account in a completely different order from the way you made them? Worse, you overdrafted by far more than you’d anticipated.

The Practice of Re-Ordering Pending Transactions

For several years, banking customers complained that banks made them overdraft by processing transactions in a way that caused the bank account funds to empty out faster.

With a stack of pending transactions in queue, many banks re-ordered them, processing the transactions, not in the order they were received, but from largest to smallest. The larger transactions would clear out the majority of available bank account funds. Then, the numerous smaller transactions would overdraft resulting in more fees. At around $30 each, overdraft fees can quickly add up to hundreds of dollars and create a hole that’s hard to get out of.

Wells Fargo Overdraft Settlement

A San Francisco judge has called the practice of re-ordering debit card transactions deceptive and ordered Wells Fargo to pay $203 million to customers who were affected by the practice. The court ruled that the practice is deceptive. This particular lawsuit is valid for the state of California.

Chase and Other Overdraft Settlement Lawsuits

Earlier this week, Chase made payments to customers in a similar class action lawsuit. Chase customers who were charged overdraft fees between January 1, 2003 and March 29, 2010 as a result of debit card transaction re-ordering will receive a mailed or account-credited refund. Check or call 1-877-552-1296 for more information.

Other large banks were ordered to send similar refunds as part of class action lawsuits. These settlement payments were generally made automatically. If you’re wondering whether your bank was part of an overdraft class action settlement suit, do an internet search for your bank’s name plus the words “overdraft lawsuit settlement” or something similar.

Beware of Scams

As always with class action lawsuits, it’s important to beware of scams. Criminals often take advantage of consumers whenever there’s a big class action lawsuit, luring victims into giving up personal information including bank account information or even a social security number. Beware imposter websites.

Tips on Avoiding Overdrafts

Banks may have abandoned the practice of re-ordering debit card transactions, but that doesn’t completely eliminate the risk of ovedrafting. You can still overdraft your account anytime you spend more than what you have available in your account. Be diligent about monitoring your account balance, projecting your future expenses and income, and spending responsibly. Those wise habits are the best way to avoid overdraft fees.

Source: Bloomberg
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Sunday, 16 June 2024

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