Ask nearly anyone with a checking account who makes purchases with a debit card or pays bills online about overdraft fees and you will likely hear a groan.

Most of us have been faced with dealing with fees stemming from an overdrawn bank account at one time or another.

Whether our employer processes our paycheck a day late or we just haven’t been keeping up on our checking account balance, most of us will face overdraft fees from an overdrawn bank account at some time in our adult lives.

What Are Overdraft Fees?

When you have an overdrawn bank account and you have a point of sale transaction, bill pay or ATM withdrawal to process, many banks will offer an overdraft service to you.

As part of the service, the bank will cover the cost of the transaction, then essentially give you a mini loan until you deposit enough money in your checking account to cover it.

Most banks will charge an overdraft fee for performing this service. The most recently reported range for these fees is $10 to $28, with the median being $27 for overdraft fees, according to an FDIC study reported on Bankrate.

While some banks put a cap on the amount of fees they charge, others charge as many of these overdraft fees as they choose. Revenue from overdraft and other fees is huge, and there is no sign of these fees slowing down in the near future.

Overdraft Fees at Pacwest Bank

Pacific Western Bank, more commonly known as Pacwest Bank, is a community bank in Southern California.

Pacwest Bank does not have their overdraft fees are readily available on their website as of the time of this article, possibly due to a new banking system that was initiated on May 16.

A phone call to a local branch revealed that the overdraft fee is $32 and for each 5 consecutive days there is a zero balance, the account is charged an additional $6.

A complaint was filed against Pacwest Bank several years ago through Ripoff Report alleging that $25 nonsufficient funds fees were assessed followed by a $5 daily fee thereafter until a deposit was made.

The consumer stated that for an $18 overdraft, because he was living on limited funds from disability, he was charged $125 for his $18 overdraft.

These costs can certainly add up for individuals who may not be aware of the overdraft fee practices at their own personal banking institution.

Reordering Transactions

One of the most hotly debated practices related to an overdrawn bank account are related to reordering transitions.

Banks and credit unions who have been accused of processing transactions in order of dollar amount, with the largest dollar amount being processed first rather in the chronological order of the transaction are doing so against the law.

For example, if someone has $100 in a checking account then makes four purchases for $25 each then a 5th purchase at $50, the account would be overdrawn after the 5th purchase and the overdraft fees would be assessed after the $50 purchase. We will say a $25 overdraft fee was charged.

When the transactions are reordered, the $50 transaction is processed first, followed by the $25 transactions. So the account would be overdrawn after two $25 transactions, leaving the other two $25 transactions to incur overdraft fees, allowing the bank to make $50 in overdraft fees rather than $25.

Filing an Overdraft Fees Lawsuit

While Pacwest Bank has not been named in lawsuits claiming that their financial institution reordered transactions, their practices, as well as the practices at many banks and credit unions are currently being investigated by class action attorneys.

If you have paid overdraft fees at Pacwest Bank or another bank or credit union for an overdrawn bank account and you believe the fees may have been improperly assessed, you may be eligible to participate in a free class action investigation.

ATTORNEY ADVERTISING

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