Philadelphia, Pennsylvania, New Jersey, Nationwide
Banks generate billions of dollars a year in customer overdraft fees, and
many of them have done so through the use of unfair policies. Policies,
such as reordering transactions, failing to notify consumers of overdrafts,
and high-price overdraft charges are just a few of the ways banks generate
increased revenue for themselves at the expense of the consumer.
The Philadelphia lawyers at Golomb & Honik, P.C. are currently litigating
bank overdraft claims from Pennsylvania, New Jersey and across the United
States. Our attorneys are pursuing claims regarding banks that have employed
deceptive financial practices to generate excessive overdraft fees from
debit card holders and check writers who unknowingly overdraft their accounts.
If you or someone you love has suffered financially because of a bank’s
deceptive financial practices, call us at
(215) 278-4449 immediately to evaluate your case.
What is Bank Overdraft Protection?
From the moment you open a checking account, it is your responsibility
to keep that account in good standing and ensure that there is enough
money in that account to pay the checks and charges you make with your
ATM card. In the past, banks automatically enrolled customers in an “overdraft
protection” program, often without their realization. Under current
law, if you want "overdraft protection" you must ask your bank
and "opt in."
If you have overdraft protection, when you spend more than you have in
your account, the bank automatically covers your purchases up to a pre-set
limit of a few hundred dollars. They will then charge you a fee for this
“service”, which is usually anywhere from $25 – $50
per overcharge. If you made several charges in a row that day-even small
charges like a hamburger or a soda-you could get hit with several hundreds
of dollars in overdraft charges without even knowing it.
Unfair Bank Overdraft Fee Practices
In theory, overdraft protection may seem like a good service. Until recently,
banks sold overdraft programs as a means of protecting consumers from
the occasional miscalculated balance and the adverse effects that can
accompany having insufficient funds.
In practice, however, the bank lawyers at Golomb & Honik, P.C. have
seen that overdraft protection has been used as a tool to maximize the
fees associated with overdrawing on your account. Banks use various deceptive
techniques to garner overdraft fees, including the resequencing of customer
transactions from the highest amount to the lowest amount rather than
when the transactions are chronologically received. By resequencing these
transactions, it maximizes the fees the banks can obtain.
Reordering Checks or Resequencing Transactions
One of the main ways banks increase overdraft fees is by reordering transactions.
Instead of posting transactions to your account in the order in which
they were made that day, banks began to abide by the “biggest check
first” policy. This meant that they would process checks or ATM
check card transactions according to size regardless of when the transaction
was actually made. This reordering allowed them to process the largest
ones first, leaving multiple “little” transactions to rake
in multiple overdraft fees.
Tony only had $100 in his checking account. That day he made 5 separate
transactions of $20 each. He then spent $50 on gas later that night. If
his transactions were taken sequentially in the order they were made,
he would have one charge ($50) that would be subjected to an overdraft
charge of $35. If the bank reordered those transactions and paid the $50
gas charge first, then 3 of his previous $20 charges would be subjected
to an overdraft charge totaling $105. This is pure profit for the bank-and
the consumer loses.
Changes to Overdraft Regulations
Prior to recently reformed federal laws, banks provided overdraft protection
and charged related fees without customer consent unless the customer
"opted out" of overdraft protection. Today, to protect the consumer,
the consumer must "opt in" to accept overdraft protection. However,
there are still exceptions that allow banks to charge overdraft fees even
if you are not enrolled in, or have opted out of, overdraft protection.
If, for example, you previously authorized automatic monthly deductions
such as utility payments that leave your account with insufficient funds,
your bank may resort to unfair practices to charge you excessive overdraft fees.
Consumers could be spared hundreds of dollars in overdraft fees simply
by being made aware that their account is low. Yet doing so would prevent
banks from making billions. In fact in 2012, banks across the United States
made $32 billion in overdraft fees. As a result, they are not eager to
discontinue their deceptive banking practices.
National Bank Overdraft Lawyers
If you or someone you love has been a victim of unfair bank overdraft fees
or other deceptive financial practices, you may be able to file a lawsuit.
We welcome prospective clients from Pennsylvania, New Jersey and across
the country. To learn more about your rights and legal options, call the
Philadelphia consumer class action lawyers at Golomb & Honik, P.C. today at
(215) 278-4449 or fill out our confidential
The national class action lawyers at Golomb & Honik, P.C. have successfully
represented individuals in Philadelphia, Camden, Allentown, Trenton, Wilmington,
Harrisburg, Newark, throughout Philadelphia, New Jersey, and across the
United States who have suffered financially from banking and financial