Banks rearranging checking account debits to gain more overdraft feesSubmitted by meekandmild on Mon, 03/18/2013 - 11:50
Veronica Gutierrez never asked Wells Fargo to act like her mother. The banking colossus just did it anyway. Here's what happened. She bought some sandwiches at Subway for $11.27. Then she purchased car parts at Autozone and went grocery shopping. Twelve transactions into the billing cycle, she wrote a check for $65. It overdrew her account, which should have cost her an overdraft fee of $22.
But Wells Fargo didn't order Veronica's purchases chronologically. Rather, it took the liberty of reordering her purchases so the biggest ones came first. Instead of the Subway meal for $11.27, the bank's reordering placed an $80 transaction at the top of the list.
This fancy footwork allowed Wells Fargo to quadruple its revenue from overdraft fees, from $22 to $88, according to an analysis by the Pew Charitable Trusts.
Does that seem underhanded and sneaky? It sure did to Veronica, who filed a class-action lawsuit against Wells Fargo over the practice. The suit won $203 million in restitution for victims. In his decision, Judge William Alsup cited an internal Wells Fargo memo that predicted the bank would earn an extra $40 million a year in overdraft fees.