Pacific Western Bank is one of the most recent banks to come under investigation for possibly predatory and unethical overdraft charges.

Background on Pacific Western Bank

Pacific Western Bank is a national bank based out of Los Angeles. The financial institution has 74 full-service branches located across California, as well as a branch in Durham, N.C. The bank has over $26 billion in assets, and provides comprehensive community banking, national lending and venture banking services.

According to consumer reports, Pacific Western Bank may be one of many financial institutions using predatory and manipulative policies when assessing overdraft charges to consumers who withdraw more money than they have in their accounts.

What are Overdraft Charges?

Overdraft charges are fees that are assessed against a customer’s account when they attempt to make a purchase that costs more money than they have in their account. According to the Solano County Daily Republic, when a customer who has opted into overdraft coverage through their bank attempts to make a purchase without sufficient funds in their account, the bank may transfer money from another of the customer’s account to cover the charge, or it may loan the customer the money. When this occurs, the financial institution will also apply an overdraft fee to the customer’s account.

Due to a law established in 2010, financial institutions are barred from charging overdraft fees to customers unless the customer has opted-in to overdraft coverage or protection. While overdraft charges are not inherently predatory, some financial institutions process these overdraft transactions in a manipulated way that some consumers and consumer advocates claim is purposefully designed to collect as many overdraft fees as possible.

Are Overdraft Charges Predatory?

According to a report by Pew Charitable Trusts, in April 2019, members of the House Financial Services Committee met with executives from seven large U.S. banks to discuss overdraft policies. Reps. Carolyn Maloney (D-NY), Brad Sherman (D-CA), and Ayanna Pressley (D-MA) specifically discussed the alleged reordering of consumer transactions by many banks in order to assess multiple overdraft charges for the same purchase.

According to a Pew study from 2016, as many as 40 percent of financial institutions process transactions out of chronological order. Although many banks claim that overdraft fees are a justified trade-off for loaning customers money when they attempt to make purchases without sufficient funds, the reordering of purchases is less easy to defend.

Several banks process transactions from largest to smallest, regardless of their chronological order. This often results in multiple overdraft fees being applied to a single transaction. As overdraft charges are often around $30 per fee, these charges can add up quickly.

If you have been assessed multiple overdraft charges for the same purchase by Pacific Western Bank or another financial institution, you may be eligible to hire an attorney and join or file a class action lawsuit regarding manipulative overdraft fee practices. Victims of manipulated transactions and multiple overdraft fees may be able to collect damages for reimbursement of these costs, as well as additional compensation.

If you were charged overdraft fees or NSF fees by your bank or credit union that you believe are improper for any reason, the attorneys who work with Top Class Actions are ready to investigate these fees on your behalf.

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This article is not legal advice. It is presented
for informational purposes only.