Did you know overdraft fees are illegal? (in Off-topic)
January 2 2010 2:22 AM EST
I just recently learned they where illegal. The bank pulled one on me a couple of years ago and a charge that should have taken more than a day to process went through before my deposit went through because deposits take about 24 hours to clear apparently, but yea the charge that went through was recent and I had already charged to the account on several other occasions before it for small amounts like $1.00-$10.00. I'll bet you already know and experienced whats gonna happen.
Yea the charge sent me into the negatives and added a overdraft fee and before my deposit went through every single one of my other charges went first so that set off a bad chain of overdraft fees.......I ended up with over $240 in overdraft fees. Of course I went in and complained to the manager who was extremely rude and belligerent. Which was ridiculous, I was going in to complain and there she was yelling at me.
I was trying to convince her that someone made it so my charges went through this way to get the most overdraft fees possible."They do this for real BTW" I had proof of course with my internet banking account I could see my account history with pretty much real time changes. So I had a printed copy of it but she ignored that and said that their internet banking is flawed and I shouldn't rely on it. Ridiculous? Maybe....well, she then told me to do it by paper and pen because its more accurate somehow. I argued that this had nothing to do with what I came into complain about. After 2 hours of her yelling in my face I gave up and walked out.
Sound familiar? Overdraft fees are supposed to be how much it cost the bank to fix the overdraft not some preset amount like $35.00, it typically cost the bank less than a dollar to fix overdrafts. Google it for a more in depth description on why it is illegal.
January 2 2010 11:30 AM EST
Without clicking through Google, I'll go ahead and say that they aren't illegal at all. However, there has been a lot a moaning and groaning about overdraft penalty reform. If I recall correctly, I heard a state-of-the-industry address a few months back that stated banks were getting about 85% of their profit from penalty fees during this bad market.
A lot of the reformation has been geared towards lowering the cost of each overdraft (eg. $10 instead of $35) and capping the total a consumer can receive each day (4-6, I believe). There's also a bad banking practice of automatically enrolling consumers into overdraft programs without consent. That should also disappear. And lastly, I remember hearing about a complaint about processing checks in order of size. I don't recall if this will be affected by any reform, but the problem is this -- If you have $230 in the bank and without paying attention, you purchase $54 of clothes, a $12 dinner, and a $200 camera on the same day, some banks will process the expensive camera first, then the clothes, and lastly the dinner, in order to charge two overdraft fees.
contact the better business bureau
January 2 2010 11:54 AM EST
overdraft fees are defiantly not illegal.
January 2 2010 11:56 AM EST
on second thought I guess they are, you just have to sue them to get your money bank.
January 2 2010 12:32 PM EST
OD Fees are not illegal just unethical in a lot of situations and under certain circumstances. Demi explained it out quite well. The only point he did not hit is that the bank themselves can take the OD Fees back with a proper explanation. You prove it was a sheer accident they can take the OD fee back. This also depends on the Banking company as well, you may have to go to upper management to get this taken care of in order to get things straightened out. Upper management does not get hit as hard from losing an OD fee here and there, whereas Lower management does. This is probably why that manager was yelling at you and fighting with you. If there is no higher person to go to then the BBB is the best place to start.
Overall though knowing how your bank works and properly planning for money spending will lessen your chances for an OD fee. They will still happen now and again and of course being prepared for that will also help.
January 2 2010 12:42 PM EST
January 2 2010 1:03 PM EST
Yea BHT a buddy of mine sued and got his money back, thats how I found out.
Amounts charged for OD fees (and other related charges to customers) were recently challenged in court. The banks won, and are still allowed to set whatever price they want for thier charges.
January 2 2010 1:06 PM EST
its illegal because it breaks some clause in the contract but then the bank words it differently so that it goes through some loop hole. I dunno the details.
Someone in the UK took the banks to court over their fees and although they didn't "win" as such, big changes were made by the banks. I think the ruling has gone to the ECoJ now and is awaiting further judgement. My debits went out the day my money went in and I was overdrawn by about 6 pence which is about 9 cents. They sent notification of a charge but the law has changed and they can't deduct the money right away. I think they debit it after a 2 week waiting period for you too put money in the account. Either way I called up and complained and as a good will gesture they removed the fines for me. At the end of the day the banks will always win and the best thing you can do is manage your money better and avoid any mishaps. Sometimes they aren't your fault but you could have probably prevented it.
January 3 2010 2:58 PM EST
Oh man, nice. This is my bank, I'm gonna join this and see what happens. Its a class action lawsuit against the bank for exactly what happened to me in my story.
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