Capital One Financial Corporation is a bank holding company. The corporation specializes in banking and savings accounts, auto loans, home loans, and credit cards. Capital One 360 overdraft protection is one of many banks’ overdraft protection services that are now under investigation for possible overdraft fee abuse affecting its customers.

Overdraft protection is a service used to cover transactions that would otherwise overdraw a checking account into a negative balance–that is, transactions for amounts greater than the current checking account balance.

Consumer advocates are now looking into the possibility of overdraft fee abuse in relation to Capital One’s basic personal checking account, also known as Capital One 360.

The concerns surrounding Capital One 360 overdraft practices include whether or not the financial corporation has been manipulating and changing around the order of a customers’ transaction in order to incur and maximize the number of overdraft fees. Other banks have been known to engage in this practice, which helps maximize their fee revenue at their customers’ expense.

With many banks’ overdraft protection plans, an overdraft fee amount is charged for each transaction for which there an insufficient funds in the account. The overdraft fee service covers the amount for which the transaction has insufficient funds for and then adds a service charge for each one it had to make.

For Capital One customers, the Capital One 360 overdraft fee charge can quickly add up as it is incurred for each overdraft processed. This will then cause the consumer to pay a large sum back to the bank in order to cover their transactions.

Consumer advocates are concerned as to whether or not Capital One 360 overdraft policy may allow the bank to manipulate the other of transactions–for example, by possibly allowing larger transactions to be processed before smaller ones. This practice depletes the account’s funds to zero sooner, so that more subsequent transactions will also incur overdraft fees.

Charges Under the Capital One 360 Overdraft Plan

As of July 1, 2010, financial corporations like Capital One have provided customers  the option of opting into an overdraft fee protection option. Although many customers have opted in for this service, other customers may not be aware of their options when it comes to this service charge.

Many consumers have opted into this service knowing that with it their check or debit card transactions will not be refused because of insufficient funds. This will save them from embarrassment, inconvenience, and in some instances even criminal prosecution.

By adding this service, however, many financial corporations, like Capital One will charge an amount for each transaction that they had to cover. Customers take issue with banks that reserve the right to alter the ordering of transactions, in order to increase their profit and inflate the amount owed back to them by covering the customer’s overdraft transactions.

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