Overdraft fees charged to customers by their bank when an account is overdrawn are not illegal.

In fact, many banks like First Hawaiian Bank offer customers an overdraft protection program should an overdraft situation occur.

However, it has been alleged that many banks like First Hawaiian Bank may not be accurately disclosing to customers that overdraft protection is optional or that they must opt into this service.

What is an Overdraft Fee?

While many consumers put their trust in their financial institution, many customers are simply unaware of what is an overdraft fee and their options regarding these charges.

Put simply, an overdraft definition is an act or instance of overdrawing a checking account. Additionally, transactions conducted via ATM withdrawals and debit card purchased can fall under the umbrella of an overdraft definition.

When consumers spend or withdraw more money from their checking accounts than is available, they are assessed a fee from their bank – commonly referred to as an overdraft charge, overdraft protection fee, or courtesy fee.

The bank can choose to cover the payment by advancing funds on the consumer’s behalf, and generally charges a fixed overdraft fee for doing so or can choose to return the payment if it is a check, online bill payment, or direct debit, and then charge a non-sufficient funds fee.

In recent years, most banks have adopted automated systems for making these decisions. These systems have contributed to the evolution of overdraft from an occasional courtesy to a significant source of industry revenues.

First Hawaiian Bank Overdraft Practices

First Hawaiian Bank, founded in 1858, is Hawaii’s oldest and largest financial institution. The bank has 57 branches throughout Hawaii, three in Guam and two in Saipan.

According to the bank’s website, FHB offers standard overdraft services included with a customer’s checking account.  These standard overdraft services are discretionary, which means the bank doesn’t guarantee that it will always authorize and pay any transaction that overdraws an account.

What may be concerning to customers is that First Hawaiian Bank’s standard overdraft services generally come with an account (there is no application or approval process).

However, for their DebitPlus feature, which the website states is a discretionary service included in FHB’s standard overdraft practices, a customer does need to opt in to authorize the bank to authorize and pay overdrafts for everyday debit card or ATM transactions.

This may be confusing since it is not clear if a customer is automatically enrolled in standard overdraft protection or if they have to opt in to it.

First Hawaiian Bank also offers overdraft protection plans, such as a link to a savings account or Yes-Check, which is a line of credit that a customer can apply for to help cover overdrafts.

Overdraft Fee Lawsuits

An investigation into excessive overdraft fees and other potentially improper overdraft practices employed by banks like First Hawaiian Bank, has been launched, with many Americans filing overdraft fee lawsuits against some of the nation’s largest banks in order recoup the excessive overdraft fees they allege were charged when their account balances fell below a minimum balance.

Numerous overdraft fee lawsuits have been filed to assist affected consumers to recoup those overdraft fees. If you would like to find out how to recoup overdraft fees assessed against you, contact an experienced consumer rights attorney for more information.

ATTORNEY ADVERTISING

The choice of a lawyer is an important decision and should not be based solely on advertisements.