Though overdraft programs are common at financial institutions across the country, certain banks and credit unions like Capital One may be using questionable practices in order to wring the most money out of their customers. The Capital One overdraft policy is currently under investigation for potentially deceiving customers.

What is Overdraft Protection?

Overdraft protection is a widely offered program at banks and credit unions all over the United States. There is nothing inherently wrong in these programs—they are meant to give customers some cushion when they hit the bottom of their checking accounts, allowing them to make transactions even when they’ve overdrawn their account. Customers are charged a significant overdraft fee for each transaction on an overdrawn account. The average overdrawn transaction brings in a charge of roughly $31. Of course, any additional transaction on an overdrawn account will add its own fee, which can quickly compound and become excessive.

Unfortunately, customers may not initially be adequately warned about how much overdraft fees may cost them in the future while they sign up for an account. Others run into deceptive overdraft practices further down the road.

Deceptive Overdraft Practices

U.S. banks bring in billions every year through their overdraft fee programs alone, and policies like the Capital One overdraft policy may be deliberately structured to ensure that this lucrative revenue keeps growing.

On top of excessive and compounding fees, banks and credit unions may deceive customers into opting into the program in the first place. Once they’ve signed up, customers may be tricked into paying even more in these fees without knowing.

There are a few methods that may be used to obscure Capital One overdraft policy or policy with another bank. For instance, when customers sign up for an account, they may not be told all the details of the program or its associated fees. Others may not be informed that they have the ability to opt out of the overdraft protection program.

One particularly controversial practice that can be used to collect more overdraft fees from customers is re-ordering transactions. Banks can deliberately skew the order of customers’ transactions to incur the most fees possible.

Customers may assume that transactions are processed in the order in which they are made—that is, chronologically. Customers expect this to be the way their transactions are processed, but some banks may purposely re-order transactions from highest to lowest. This means that a person’s accounts is more likely to be overdrawn earlier, as more money is charged first. On top of that, each subsequent transaction will then incur its own overdraft fee, compounding over time to maximize the amount a person can be charged in overdraft fees. Customers may be left with a much heftier charge than they ever expected.

Filing a Lawsuit Over Deceptive Capital One Overdraft Policy

Some customers who have been affected by deceptive practices have begun filing lawsuits against their banks and credit unions. If you believe you have been subjected to unfair overdraft practices through Capital One overdraft policy or deceptive practices at another financial institution, you may be able to join a class action overdraft fees investigation.

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