For years, allegations have been made about excessive bank overdraft fees.

Overdraft fees charged to customers by their financial institution when an account is overdrawn are not illegal.

In fact, many banks like UMB Bank offer customers an overdraft protection program should an overdraft situation occur.

However, some of these overdraft protection services such as the overdraft fee practices at UMB Bank may be misleading to customers.

As of July 1, 2010, banks are required to ask new customers if they wish to opt-in to overdraft protection. That legislation extended to existing customers as of Aug. 15, 2010.

There is no legislation regarding how much money can be charged for overdraft fees, meaning customers who opt-in to overdraft protection programs could still pay up to $35 for transactions that take them even $1 into overdraft.

What is an Overdraft Fee?

While many consumers put their trust in their bank, many customers are simply unaware of what is an overdraft fee and their options regarding these charges. Put simply, an overdraft is an act or instance of overdrawing a checking account.

Additionally, transactions conducted via ATM withdrawals and debit card purchased can fall under the umbrella of an overdraft.

When consumers spend or withdraw more money from their checking accounts than is available, they are assessed a fee from their bank – commonly referred to as an overdraft charge, overdraft protection fee, or courtesy fee.

The bank can choose to cover the payment by advancing funds on the consumer’s behalf, and generally charges a fixed overdraft fee for doing so or can choose to return the payment if it is a check, online bill payment, or direct debit, and then charge a non-sufficient funds fee.

In recent years, most banks have adopted automated systems for making these decisions. These systems have contributed to the evolution of overdraft from an occasional courtesy to a significant source of industry revenues.

Overdraft Fee Practices at UMB Bank

For example, UMB Bank offers three programs advertised as Overdraft Protection. According to their website, customers may select one, two, or three overdraft protection plans.

The first program, called TotalCheck is similar to a credit card, where customers, upon approval, can advance funds for the exact amount that the account is overdrawn, and bring the account to a $0 available balance.

The second option is linking their UMB Bank credit card to their checking account, which can automatically transfer to a checking account to cover overdrafts in $100 increments.

Additionally, overdraft practices at UMB Bank include a third option known as account to account transfers.  This option is for customers who have multiple UMB Bank accounts.  Transfers are conducted in $25 increments in order to cover any overdrafts.

Overdraft Fee Practices Questioned

In 2011, UMB Bank agreed to a $7.8 million settlement of a class action lawsuit alleging improper and deceptive overdraft fee practices at UMB Bank.

The Missouri plaintiff alleged that UMB Bank unfairly charged overdraft fees and treated pending deposits differently than pending withdrawals and rearranged withdrawals to maximize overdraft fees.

An investigation into excessive overdraft fee practices at UMB Bank and other financial institutions has been launched, with many consumers filing overdraft fee lawsuits against some of the nation’s largest banks in order recoup the excessive overdraft fees they allege were charged when their account balances fell below a minimum balance.

In addition to charging excessive overdraft fees, they also claim that banks routinely apply larger transactions before smaller ones – all for the purpose of collecting additional overdraft fees.

Numerous overdraft fee lawsuits have been filed to assist affected consumers to recoup those overdraft fees. If you would like to find out how to recoup overdraft fees assessed against you or believe that you were not properly informed about the overdraft fee practices at UMB Bank or another financial institution, contact an overdraft fee attorney for more information.

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