The overdraft fees of banks and credit unions have been recently increasing, causing disdain in many of their members.

It was only recently in 2010 that federal laws were passed requiring banks and credit unions to disclose their overdraft practices to customers and to gain their permission before enrolling them in their programs.

Overdraft fees at UMB Bank are under scrutiny, just as they are at many financial institutions.

Critics of these fees at banks and credit unions say the practices target members who are in a vulnerable financial state to begin with.

According to a recent study by the Pew Charitable Trusts, customers making less than the national median yearly income of $54,000 are most affected by overdraft fees.

Nearly 25% of consumers paying these hefty overdraft fees are shelling out what equates to a week’s worth of wages. Furthermore, the Consumer Financial Protection Bureau stated that 628 of the largest financial institutions earned $11 billion from overdraft fees in 2015 alone.

The Consumer Financial Protection Bureau is currently analyzing the overdraft practices of different financial institutions.

Problems with Overdraft Fees

Overdraft fees are the fees financial institutions charge their members when money is moved from either a secondary checking or saving account to their primary checking account when it becomes insufficient.

Also called insufficient or nonsufficient fund fees, customers face these fees when they use overdraft protection to cover small purchases such as groceries when their checking account becomes too low.

Even though overdraft protection service can be helpful to most consumers, banks and credit unions have allegedly been abusing overdraft fees to target lower income members for some time.

Overdraft fees as UMB Bank are an example of this, as the financial institution recently faced major criticism for its overdraft protection services.

The bank had settled an overdraft fee class action lawsuit in 2011, from customers who paid overdraft fees at UMB Bank from 2005 through 2010 with the settlement amount totaling $7.8 million. The overdraft fee lawsuit alleged UMB Bank had improperly processed debit card transactions, which would maximize overdraft fees.

UMB Bank offers a number of overdraft services to its members, with the overdraft fees at UMB Bank at $25 per transaction. The bank promotes its overdraft protection services to customers by stating this provided a number of protections for their checking transactions.

Overdraft fees at UMB Bank seem to be common practice, as numerous customers have reported experiencing problems with overdraft fees.

The overdraft fees at UMB Bank and many other financial institutions have allegedly caused many consumers to face avoidable financial struggles due to the banks and credit unions allegedly improperly indexing consumer transactions.

Consumers who were charged improper overdraft fees at UMB Bank or other financial institutions may be able to file legal action against their respective banks and credit unions. Potential claimants can contact a specialized lawyer to determine their eligibility for an overdraft fee lawsuit.

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