Savings Account & MMA Rates
CD (Certificate of Deposit) RatesHooray for federal Judge William Alsup of California.
At the end of a two-week trial he’s ruled that Wells Fargo secretly and deliberately manipulated the way it processed checking account transactions in order to ding its customers for more overdraft fees.
Alsup ordered the bank to pay customers $230 million in restitution – but don’t sit by the mailbox waiting for your check.
Wells Fargo says it’s “disappointed” in the ruling and plans to appeal.
At issue was the bank’s 2001 decision to processes a customer’s largest purchases first, rather than deducting each transaction in the order in which it occurred.
Wells Fargo also instituted a policy of automatically extending overdraft protection to its checking account customers.
Taken together this allowed the bank to drain an account with a big check or debit card purchase, and then charge $35 overdraft fees on every smaller transaction it processed after that.
Debit card purchases that would have been turned down because the account was overdrawn, were now allowed to proceed – and generate another penalty fee.
“The bank went to considerable effort to hide these manipulations while constructing a facade of phony disclosure,” CNNMoney says the judge wrote in his ruling.
Wells Fargo was hardly alone in pursuing this strategy to milk its checking account customers for billions of dollars in “gotcha” fees.
Indeed, the widespread use of this strategy was behind the Federal Reserve’s new rules that take effect Sunday and forbid banks from automatically signing customers up for overdraft protection.
It’s why you shouldn’t opt in to those programs – and the overdraft fees that come with them.
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