Most recently, Wells Fargo was sued in a California Federal Court for methods related to their overdraft fees. The presiding judge, William Alsup, handed a ruling which ordered Wells Fargo to pay back a considerable sum to Californians that it had unfairly dinged for overdrafts. The judge held that the bank had purposely structured their overdraft policies to extricate profit from their customers. Many contend that an individual is better off getting a cash advance than relying on overdraft protection.
Wells Fargo ordered by judge to pay $ 230 million
Wells Fargo was ordered by Federal Judge William Alsup to pay customers back for overdraft fees to the tune of $ 230 million, according to Forbes. Overdraft fees often have higher APR than payday loans. One of the practices in question is clearing the largest charges first, which can exacerbate an overdraft of only a couple of dollars, resulting in a charge of $ 35 per occurrence.
Wells Fargo took fees from their banks to the bank
Wells Fargo did not make consumers aware they could opt out of overdraft protection or decline transactions that would put them in overdraft. The judge also cited documents from the bank that showed they attached lines of credit to accounts so that all charges would clear and therefore the fee would be unavoidable as a result. The judge cited internal communications from Wells Fargo that almost blatantly expressed the motive for their overdraft policies as being to extricate profits. Between 2005 and 2007, Californians paid Wells Fargo $ 1.4 billion in overdrafts fees. The rate of interest on overdraft fees can be higher than if a person were to get a personal unsecured loan to float them.
Overdraft practices overhauled
There are new rules in place concerning overdraft practices, and other credit from banks for instance charge cards. . Overdraft fees make the banking industry $ 38 billion a year.
More on this topic available at these websites
forbes.com/davidrandall/2010/08/11/how-wells-fargo-cheated-its-customers/?boxes=Homepagechannels
money.cnn.com/2010/05/21/news/economy/consumer_protection/index.htm
