The Business of Bank Overdraft Fees

The Business of Bank Overdraft Fees

By Amanda Antell

The Consumer Financial Protection Bureau recently released its report on how much money American consumers have spent on overdraft fees. The agency found that overdrafts accounted for 61% of fees collected on checking accounts from customers. These fees are big business for banks, with some banks charging as much as $35 per overdraft. Consumer advocates argue this has led many banks to employ abusive tactics to rack up as many overdraft fees as possible.

One of the biggest examples of overdraft abuse comes from Bank of America (BofA), which reached a $410 million class action settlement over its overdraft fee policy. The class action lawsuit alleged that BofA deliberately set up a system to penalize customers by posting debit transactions from the highest dollar amount to the lowest – rather than in the order made – to trigger overdraft fees.

In 2010, Congress decided that banks could not charge for debit card overdrafts unless the customer consented to the charges. To get around this, most banks like Bank of America offer “overdraft protection” plans to lure customers into consenting to overdraft charges, disguising it as a service to the customer.

Approximately a quarter of bank customers incur at least one overdraft a year, but some consumers trigger multiple overdraft fees a year because the bank does not decline debit card purchases when there is not enough money in the account. Many banks have been accused of targeting consumers with small banks accounts and using various methods that allow customers to easily overdraw their accounts in order to make a simple payment. Bank of America, Chase, and Wells Fargo have all been accused of such.

If you were charged an overdraft fee by Bank of America after June 1, 2011, you may be eligible to participate in a free class action lawsuit investigation and recover the improper fees you may have paid. Submit your information for a free review at the Bank of America Overdraft Class Action Lawsuit Investigation.

Updated July 22nd, 2013

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