Overdraft protection offered by banks may be associated with deceptive policies that take advantage of consumers.

Simmons Bank

Simmons Bank is an Arkansas-based financial institution which boasts to have spent over 100 years providing customers with “the products and services they need to turn their financial dreams into reality.” Although the bank touts itself as committed to consumer financial health, the institution is being investigated for potentially deceptive overdraft practices.

Overdraft Protection Programs

When a transaction exceeds the amount of money a consumer has in their checking account, the bank will typically deny the transaction. However, if a consumer has enrolled in an overdraft protection program, they may be able to proceed with transactions.

With overdraft protection, the bank automatically transfers money from a savings or credit account into a checking account to cover a transaction that exceeds the amount of money they have in their checking account.

Transferring money from one account to another to cover a transaction is usually associated with a fee, typically around $12, though these fees are not limited by any regulations so some banks and credit unions charge $30 or more per transaction.

In order to be protected from overdrafts, consumers can opt into these programs as per federal regulations. If a bank or credit union enrolls a consumer into an overdraft protection program without their consent, they may be in violation of banking regulations, according to the U.S. Department of the Treasury.

Deceptive Overdraft Policies

Some banks have been accused of using deceptive overdraft practices to maximize the number of fees it charges consumers. Fees, including those charged with overdraft programs, make up a significant portion of a bank’s profit. With the rise of mobile banking, consumers are generally more informed about their balances and are therefore over-drafting their accounts less frequently. To maintain its profit margins, some banks and credit unions are engaging utilizing deceptive practices.

One common allegation is that banks reorder transactions in order to maximize the number of fees it can charge. Instead of processing transactions chronologically, some banks process them in order from largest to smallest. For example, if someone has $300 in their account and makes three $20 purchases and one $400 transaction, they may expect to be charged one overdraft fee for their last, largest purchase. However, if the bank reorders their transactions to process the $400 first, even the smaller $20 transactions will trigger overdraft fees.

Another deceptive overdraft fee policy is charging multiple overdraft fees for one transaction. In some cases, banks will try multiple times to process a single transaction. This can result in more than one overdraft fee. If a bank tries to process a transaction three times and each attempt garners a $30 overdraft fee, this can result in nearly $100 in overdraft fees for a single transaction.

Some consumers say banks base overdraft fees off of available balances rather than actual balances. This reportedly causes consumers to check their balances, think they have enough for a transaction, and later be hit with an overdraft fee because the bank does not use that same balance to determine overdraft fees.

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.

Learn More

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