Consumers Fight to Recover $40 Billion From Banking Industry
UPDATED: August 5, 2019
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Most of us have been overdrawn on our bank accounts at one time or another and have had to pay a fee for our oversight. Unfortunately, banks have capitalized on this by applying large transactions to balances first – making it easier for accounts to become overdrawn. It's big bucks for the banking industry – nearly $40 billion a year. Consumers are now fighting back with bank overdraft fee lawsuits to get those monies reimbursed.
How Banks Are Getting Richer & Richer
Banks have been charging customers for overdrafts for years and years and years. Twenty years ago, banks wouldn’t charge a fee at all. It was more of courtesy to their customers, but it’s become a huge money-maker for the banks to charge these fees. According to bank overdraft fee lawyers, here's how it works:
Each time someone goes over their limit, the banks charge a fee, generally ranging from $25 to as high as $40 or $50. In some instances, once you go over the limit, what the banks have done is rearrange the order of the transactions so as to maximize the overdraft fees they are able to get from their customers.
For example, let's say you have $200 in your account and purchase a $2 ice cream cone, a $5 wallet, and a $20 dinner. However, later on the same day, you also make your car payment for $200. What happens is that banks will rearrange the fee so that you’re charged for each transaction – first the highest and then the others.
No Prior Consent Obtained
On top of rearranging fees to cause overdraft situations, most banks never obtain their customers' consent to participate in this bank overdraft process in the first place. For example, if you have a credit card and you go over your limit, what happens when you go to the store and you’ve maxed out on your credit card? The store says, “I’m sorry, but you’re over your limit. You can’t make this purchase.” What the banks do is to assume that you’re okay with going over your limit and are willing to pay for that, but they’re going to charge you a $35 fee to do that.
Bank overdraft fee lawyers say that there’s really no reason why banks can't do the same thing – but allow their customers to opt into the program just like credit card companies do. However, the choice to do so should be made by the customer – not hidden in the fine print of a bank contract.
Consumers Say, “Put the Terms in Writing!”
Bank agreements are typically signed in the very beginning whenever you open up a bank account – and contain pages and pages of boilerplate language that no one reads or can't read because the print is so small. So, most customers have no idea that it’s being done until they’re hit with hundreds or thousands of dollars worth of fees. Bank overdraft fee lawsuits allege that the terms should have been put in writing and are customers are now seeking to have those fees reimbursed.