Many bank and credit union customers have felt as if they have been wrongly charged for overdraft fees by their financial institutions. Some have even accused their bank or credit union of participating in tampering with their bank transaction posting order.

One New York man filed a bank transaction posting order lawsuit against his bank, TD Bank, claiming that they charged him “egregious” overdraft fees.

What is Overdraft Protection?

When a bank customer tries to spend more money than he or she has in their checking account, the account is considered overdrawn. Most banks have opt-in programs to help out customers if this occurs.

These programs are called overdraft protection programs. A bank may not sign up a customer for overdraft protection, but a customer must opt-in to this type of program. Often, these programs come with fees associated with each overdrawn transaction. Sometimes these fees can be upwards of $35 per transaction that overdraws the account.

New York plaintiff John K. filed this bank transaction posting order lawsuit alleging that TD Bank not only charged him unreasonable fees, but that they participated in tampering with the bank transaction posting order so that larger transactions hit his account before smaller ones.

Why is Bank Transaction Posting Order Important?

Bank transaction posting order is important because many consumers assume that their transactions will be post to their accounts in the order that they are made.

For example, if a customer made a $10 transaction at a food establishment in the morning and then a $150 transaction at a grocery store later that day, the customer may reasonably assume that the $10 charge will post before the $150 charge.

However, some banks, including TD bank, have been accused of participating in altering bank transaction posting order. In fact, some customers have even claimed that banks have done this purposefully in order to charge their customers more in overdraft fees.

If a bank changes the bank transaction posting order to reflect posting the larger transactions first, it may overdraw a customer’s account before the customer is aware or without their knowledge.

In the same example, that $150 transaction might be posted earlier than the $10 transaction. If the transactions had been posted chronologically, the customer might only incur one overdraft protection fee. But if the bank changed the bank transaction posting order, the customer might now incur multiple overdraft protection fees.

Many customers who use overdraft protection cannot afford to incur multiple overdraft protection fees and are not able to pay for this. Many overdraft protection users may pay up to a weeks worth of wages to pay for their overdraft fees.

In the case of this New York plaintiff, he accused TD Bank of processing fees from highest to lowest. He told Law360, “In these instances, defendants manipulate and alters the timing of the customer’s transactions, in a manner inconsistent with Defendants’ contractual obligations, in order to maximize overdraft fees imposed on the customer. Thus, it is through manipulation and alteration of customers’ transaction records in a manner inconsistent with defendants’ contractual obligations that defendants maximizes overdraft fees imposed on customers.”

If you believe you have been wrongly charged for overdraft fees or that your bank has tampered with the bank transaction posting order, you may have a legal claim.

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