Sunday, August 22, 2010
Wells Fargo to Pay $200 Million in Overdraft-Fee Case
U.S. District Judge William Alsup yesterday ordered Wells Fargo & Co. to pay more than $200 million to compensate customers who the judge said were improperly charged millions in overdraft fees, the Wall Street Journal reported today. Judge Alsup said that the bank improperly generated excessive overdraft fees for customers by posting transactions in an order that would generate more fees. Banks' practices in charging overdraft fees, which generate about $40 billion a year for the banking industry, have been at the heart of customers' complaints against banks since the onset of the financial crisis three years ago. To charge higher fees, banks used various methods in handling customers' accounts. In many cases, banks re-ordered customers' transactions at the end of the day, first subtracting the largest purchases from the account's balance.