You may be charged an overdraft fee multiple times for the same transaction and this annoying behavior is legal.

When are overdraft fees charged?

Overdraft protection programs are offered by banks like Bank of the West to protect accounts from going negative.

According to Nerd Wallet, if a consumer opts into these programs, they will be able to proceed with transactions that would otherwise put their account into the negative. Instead of transactions being denied, money is transferred from a savings or credit account to cover the charge.

When consumers have opted into these services, an overdraft fee is charged every time money is moved to cover a transaction. For most banks, these overdraft fees are around $35 but it varies.

How many times can you be charged an overdraft fee?

As previously stated, overdraft fees can only be charged if consumers have opted into overdraft protection. If consumers have not opted in, banks cannot charge them any overdraft fees. Instead, banks are supposed to deny transactions that would overdraft an account.

However, if a consumer does opt into overdraft protection, a bank can charge multiple overdraft charges. Some banks like Bank of the West reportedly try to charge a bank account multiple times for the same transaction, meaning that one transaction can result in multiple nonsufficient fund fees, returned item fees, and overdraft fees.

At SunTrust, a consumer can only be charged an overdraft fee six times a day. However, at $36 per fee, this means that consumers could be charged hundreds of dollars a day simply in overdraft fees. Other banks like Chase reportedly can only charge three overdraft fees a day. Regardless of the number of overdraft fees a bank chooses to charge, these fees can quickly add up.

In addition to multiple overdraft fees, some banks like Bank of the West may charge something called an “extended” overdraft fee. This is charged if an account remains negative for an extended period of time. Each bank’s extended period will vary, but most banks will charge these extra fees between five and ten days.

What regulations prevent multiple overdraft fees?

Unfortunately, banks are not legally limited in the number of overdraft fees that they can charge to consumers. Regulatory bodies are reportedly looking into the issue, but there have been no new rules to limit the number of overdraft fees banks are able to charge.

In August 2018, senators Cory Booker and Sherrod Brown announced that they were pushing forward the Stop Overdraft Profiteering Act of 2018. Under the proposed law, according to Inside Sources, banks would only be able to charge overdraft fees on debit transactions or ATM withdrawals once a month and up to six times per year.

According to Inside Sources’ coverage of the bill, the act also “would also mandate that banks post transactions in a manner that minimizes overdraft and nonsufficient fund fees (oftentimes, banks reorder transactions in such a way as to maximize overdraft fees, which can mean, in some cases, that the consumer faces multiple charges).”

This bill is still in its early stages, but it would provide much better protection than current regulations.

If you were charged overdraft fees or NSF fees by your bank or credit union that you believe are improper for any reason, the attorneys who work with Top Class Actions are ready to investigate these fees on your behalf.

Learn more by filling out the form on this page.

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This article is not legal advice. It is presented
for informational purposes only.