Consumer protection attorneys are investigating banking institutions and credit unions like Commerce Bank for using deceitful overdraft fee practices.

While some banks convince customers to open accounts by advertising various perks such as cash back and other marketing tools, many banks and credit unions have been raising overdraft fees imposed on customers as well.

Overdraft Definition

The overdraft definition is generally explained as a negative account balance in a consumers banking or checking account caused by drawing or spending more money than the account holds.  The federal government also has a similar overdraft definition for banking and credit union regulatory purposes.

What is an Overdraft Fee?

An overdraft fee is a fee that banks and credit unions charge consumers when they overdraw their accounts.  Banks often provide or allow their customers to sign up for overdraft protection which allows the consumer to complete a purchase even if their account has insufficient funds to cover it.

When consumers use these services, an overdraft fee is incurred.  Consumers who do not have overdraft protection and overcharge their account are merely not allowed to complete the transaction (i.e, the transaction is denied).

Overdraft Fees and Federal Regulations

In August 2010, the federal government implemented regulations that now require consumers to expressly opt-in to overdraft protection. The Consumer Financial Protection Bureau is investigating the current overdraft fee practices of banks and credit unions around the nation and may release further regulation surrounding overdraft fee structures.

But why do consumers need protection from overdraft fee practices? Due to fewer customers overdrawing their accounts, many banks and credit unions, like Commerce Bank, have been steadily increasing their overdraft fee prices.

Moreover, some financial institutions are also using a deceptive practice where they process transactions out of order to maximize their overdraft fee profit.  For example, if a consumer had $50 in their checking account and completed four transactions in the following order $5, $10, $35, and $20, the consumer would incur a single overdraft fee for the $20 purchase.  But if the bank processed the transactions out of order ( $35, $20, $10, and $5) the consumer would incur three overdraft fees.

Depending on the financial institution, overdraft fees cover a wide spectrum.  In some cases, a consumer may overcharge their account by as little as $5 but end up paying over $35 dollars for the overdraft fee.

Commerce Bank Overdraft Fees

Commerce bank is a popular banking institution in the US. Consumers using Commerce Bank overdraft protection services are charged $35 for overdrafts or insufficient funds, and $10 per overdraft transfer in fees.

An overdraft, according to Commerce Bank, is any insufficient funds created by check, ATM withdrawal, or other electronic means.  The overdraft transfer is a service that customers can use by linking another account to their checking account to cover any overdraft charges.  This service can only be used once per day.

Overdraft Fee Lawsuits

Consumer protection attorneys are looking for potential plaintiffs to bring overdraft fee lawsuits against various financial institutions who have used improper or deceptive overdraft practices.  Consumers who were charged overdraft fees by their banking institution may be able to join the lawsuit investigation.

ATTORNEY ADVERTISING

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