Wells Fargo Ordered To Pay $203 Million For Processing Transactions High To Low, Maximizing Overdraft Fees

A California judge ordered Wells Fargo to pay California customers $203 after finding that the bank had deliberately manipulated the way it processed transactions in a way that turned one overdraft fee into as many as 10, at $35 a pop.

Internal bank memos, the judge said, showed that after 2001, along with many other banks, Wells Fargo decided to change the way it processed account transactions from low to high to high to low. In addition, ACH and check transactions were commingled with debit, whereas before they had been separate.

In his 90-page ruling, the judge wrote:

Internal bank memos and emails leave no doubt that, overdraft revenue being a big profit center, the bank’s dominant, indeed sole, motive was to maximize the number of overdrafts and squeeze as much as possible out of what it called its “ODRI customers” (overdraft/returned item) and particularly out of the four percent of ODRI customers it recognized supplied a whopping 40 percent of its total overdraft and returned-item revenue.

…In the February 2002 BSE memo, the bank explained that the December 2001 commingling change was designed “to more-closely mirror true High-to-Low sort order” (TX 36). This is significant because Wells Fargo knew — and its own expert witness, Professor Christopher James, confirmed at trial — that high-to-low posting
would “mechanically . . . lead to more overdrafts” than other posting order (Tr. 613, 1863-64). It is a mathematical certainty.

Weighing all of the evidence presented at trial, this order finds that gouging and profiteering were Wells Fargo’s true motivations behind the high-to-low switch and the allied practices that soon followed. High-to-low posting was adopted exclusively to generate more overdraft fees and fee revenue at the expense of depositors. The two closely allied practices that followed were similarly motivated by a singular desire to boost overdraft fee revenue using the bank’s high-to-low bookkeeping device. While these changes occurred prior to the class period, they set the stage for the profiteering that ran rampant during the class period and continues even now.

In their defense, Wells Fargo argued that their customers wanted and benefited from high to low transaction processing, saying that depositors would rather have multiple small transactions bounce than a single rent payment bounce. However, at trial they did not present any evidence beyond the hypothetical to support this notion.

Wells Fargo plans to appeal.

Wells Fargo loses overdraft fee case [CNN Money] (Thanks to Alice!)
Full text of ruling (PDF)

Comments

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  1. the_Jenkins says:

    Technically, WF can do what they want. If the depositor doesn’t like, they can switch banks for manage their money better.

    I don’t see why they had to be sued.

    /wrists

    • DariusC says:

      I hope you are ready for a stream of commentors disagreeing with your rather anti-consumerist post.

      In other words, the poster does not believe this was a worthy article (which s/he is wrong). Personally, I am glad this happened to them, they charged me fees for having fees charged to my account (an overdraft fee charged on top of another overdraft fee).

    • Grabraham says:

      Technically they can. Legally the judge just kicked them in the jimmy

    • Level-Headed, Even-handed says:

      Profiteering is a pejorative term for the act of making a profit by methods considered unethical. I believe (and I’m not a lawyer here) lawyers are arguing that their methods of clearing charges constitutes theft through profiteering, because it’s done with the soul purpose of taking money from people unethically.

    • Tim says:

      It would seem that the law disagrees with you. If it were legal, WF wouldn’t be fined $203 million.

    • backinpgh says:

      It would seem to me that at the very least they are legally required to disclose that they will alter the order of your transactions in order to screw you more effectively. If I buy a candy bar one day, and a burger the next day, and a car the day after that, I would fully expect the transactions to go into my account in that order.

    • mythago says:

      You don’t understand banking regulations and haven’t read the court opinion. We get it. Did you have another point other than trolling?

    • eturowski says:

      It’s called a precedent. If you think Wells Fargo is the only bank that does this, you’re wrong. It’s a predatory banking practice that needs to be stopped across the board.

      • hansolo247 says:

        only somewhat agree.

        This practice is well known, and the exact procecure isn’t disclosed in the T&Cs.

        The people paying overdrafts is what has allowed me to have debit rewards and free checking. Someone’s gotta pay.

      • jamar0303 says:

        Not all banks do this. Some banks are nicer about it. Like Bank of East Asia:
        http://www.hkbea-beausa.com/pb/loan_crl.html

        Unfortunately, they only seem to operate in two states, but if they have a branch near you they’re worth looking into.

    • Conformist138 says:

      BOA got sued for this, too. The problem was that they put the transactions into another order. Think about that, they rearranged the chronology of transactions (for transactions that will post on the same day, of course) in order to trigger more fees than the customer actually deserved. I was furious with BOA cuz I knew an account was going to overdraw and I couldn’t really stop it, but I thought “hey, sucks, but that is what overdraft protection is for, i’ll just take the $35 hit”… Yeah, they rearranged shit so the $80 I went under didn’t trigger one fee… it got 5! I called the bank and explained that, no, if you look at the times the bills were paid, I only went over on the last one. The bank said it was for my protection that they rearranged the order for me to prevent items from bouncing. Um… what? They covered all the items anyway, what was going to bounce? I got them to remove 2 of the 5 fees.

      THIS is why it’s illegal (or needs to . Fine me based on what I do, not on what they wish I’d done.

      • myCatCracksMeUp says:

        Your case is an excellent example of why it’s rotten and wrong for banks to do what they do. I’m SO glad that Wells Fargo lost!

  2. HeyThereKiller says:

    I’ve been trying to figure out a way to get TD Bank in trouble for doing this for months! I was contemplating sending a sternly worded email to Regis and Kelly, but taking them to court seems like a much better option.

    • JuanHunt says:

      Find the name of the law firm that won this case. The firm will now start going around the country suing every bank for the same offense. Downside is the shredders and IT people at the banks are at work at this moment covering up the fraud.

      • kujospam says:

        National City Bank, now bought by pnc. Knew about this for a long time. I also said to several people the same thing. At least disclose that is how you are going to process them, and when I complained they said, well now you know. Go figure, now I work for them. LOL

    • Kevin411 says:

      Bank of America admittedly does this. I recently (finally) got around to instructing Bank of America to turn off my overdraft “protection” and JUST TODAY received a letter warning me about all the bad things that could happen because of the change. Coincidentally, the letter included this phrase in an example: “Because we process larger payments before smaller ones, your check for $80 is paid first and reduces your balance to $20. As a result, the recurring debit charge of $75 exceeds your available balance and you will be charged a $35 overdraft fee.” (Yes, B of A charges an overdraft fee even, if you have explicitly told them not to, in “certain circumstances.”)

  3. dragonfire81 says:

    Don’t all banks do this anyway? I had a problem with an overdraft charge just a few months ago when a charge went through BEFORE a deposit I made. The problem with this was that I made the deposit BEFORE I incurred the charge!

    I fought that one and got my fees back but I was under the impression banks routinely played wise with how deposits and charges clear accounts.

    • ExtraCelestial says:

      They don’t. Do us all a favor and vote with your dollars by moving on to a better bank. They are out there I promise! If enough people leave, the crappy banks will be forced to change their policies in order to compete.

      .

    • MaxPower says:

      That happened to me once with Wells Fargo. I use USAA now.

    • RvLeshrac says:

      They all do it, mainly because, until now, no one had the balls to sue them for it.

  4. humphrmi says:

    Here’s where their defense argument falls apart:

    “In their defense, Wells Fargo argued that their customers wanted and benefited from high to low transaction processing, saying that depositors would rather have multiple small transactions bounce than a single rent payment bounce”

    But, they don’t actually bounce anything. They pay them, and charge an overdraft fee for that. So there’s no risk of bouncing a rent payment, only them getting less in fees for paying it.

    • Rectilinear Propagation says:

      But, they don’t actually bounce anything. They pay them, and charge an overdraft fee for that. So there’s no risk of bouncing a rent payment, only them getting less in fees for paying it.

      OMG, THIS.

    • Rectilinear Propagation says:

      Wait no, that actually doesn’t work because the bank can choose not to cover something so instead of overdrafting it would bounce.

      They’re willing to cover the coffee or the trip to the gas station but they probably won’t cover it if it’s a several hundred dollar check.

      • Scuba Steve says:

        But You (and the banks) were only looking at 2 alternatives:

        Pay the rent check first or
        Bounce the rent check

        When it was actually
        Pay the rent check first (and overdraft everything smaller to maximise over-drafts) or
        Pay the amounts in the order they were recieved, or lowest first, (thereby minimizing overdrafts)

        Those two situations were the two options banks had, and they started going from the latter payment method to the former (specifically to raise overdraft charges, as stated in court documents)

        The bounced check scenario was never a valid one.

        • Rectilinear Propagation says:

          Pay the amounts in the order they were recieved, or lowest first, (thereby minimizing overdrafts)

          OK, but if the rent check was actually the last item received, making it last whether you go by date or amount, how does that avoid the bounced check? The bank isn’t going to do an overdraft for a check that large, they’re going to let it bounce. The bank doesn’t provide coverage for any and all overdrafts, that’s at their discretion.

    • c!tizen says:

      exactly! a $35.00 fee seems more than reasonable to me if it covered my $1000.00 rent check. Hell, that’s a 3% profit on that transaction, which I’m sure only part insufficient funds (maybe $100 or $200).

      But to charge a $35.00 fee for $10.00 charge, then another $35.00 fee for a $20 charge, then another $35.00 fee for a $5.00 charge, etc… all without my approval; that should be illegal.

    • pcPhr34k says:

      Awesome point!

    • naturalblue says:

      You’re the smartest kid in class today! You get a gold star!

    • windycity says:

      My understanding is that most banks have a limit on the aggregate of overdrafts they will cover. For example, if the limit is $1000 and you have a $975 mortgage payment due, those three lattes, groceries for dinner, and book you just purchased added to the mortgage payment, will put you over the overdraft limit. The bank processes the larger payment first, and of the other five smaller payments, maybe only two get paid as opposed to paying the smaller five payments first and then declining to extend overdraft coverage to your mortgage payment because that puts you over the limit.

      Trust me, I’m not trying to support their practices, I’m just pointing out that it is possible to have things bounce even with overdraft protection. Additionally, banks use wording that allows them to choose whether or not they will make a payment on an overdrawn account even if that account has overdraft protection, so whether you have it or not, you could still be screwed.

      • Rectilinear Propagation says:

        Additionally, banks use wording that allows them to choose whether or not they will make a payment on an overdrawn account even if that account has overdraft protection, so whether you have it or not, you could still be screwed.

        Yes, this is the part I’d forgotten about when I made my first comment.

      • BStorm says:

        If you’re about to go that far overdrawn in the first place then you’re got far more serious problems and a few overdrafts are just snowflakes on the iceberg.

        This is more like having $1000 in the bank and making 5 $5 charges, then an unexpected $977 charge hits your account (or the bank decides to ‘delay’ your deposit until clearing any pending debits, which is another sneaky trick). Rather than paying the first $25 in charges and then hitting you with a single $35 overdraft for the $977 charge, the banks will pay the $977 charge, then hit you with 5 overdrafts for the other 5 charges, and you end up owing the bank $175 instead of just $35. The charges are paid either way, but the second way makes the bank $140 richer and now you’re in the red by an extra $140.

        Personally I’d rather have to climb out of a $37 hole than a $177 hole.

      • Awesome McAwesomeness says:

        How about just having the money in the bank to pay for all of it instead of overdrafting then complaining about the way they process the transactions that you didn’t have the money to cover in the first place. If someone can’t cover the rent check, why would they go out and buy lattes and books? In the old days, they could send you to jail for hot check writing.

        I’m okay with a couple of free passes for people. We all make an occasional mistake, but in one of the posts yesterday it talked about how the same people routinely do this. If they make purchases over and over that they know they can’t pay for, then they do deserve severe penalties. They are asking the bank to float them money that they don’t have.

  5. Suburban Idiot says:

    Maybe I’m naive, but I don’t think that consumers would rather pay a whole bunch of NSF fees rather than one.

  6. the Persistent Sound of Sensationalism says:

    I had an unsuccessful argument via email about this with Wells Fargo. I know I was right, and it even looked fishy if you were looking at my transaction records. It looked like someone had taken the time to figure out how to process my transactions in an order that would cause an overdraft.

    • LandruBek says:

      Thanks to modern technology, a computer algorithm can consider all possibilities and determine how best to screw you in mere microseconds! Viva the technology revolution!

  7. sonneillon says:

    I’m not sure that this is a proper judgment. Yeah Wells Fargo is a jerk, but they did not break any laws or contracts at that time. This seams a bit shakey legally.

  8. madtube says:

    The bad thing is, most banks nowadays do this. BoA did this to us for years. We always made sure that there was always enough money in the account plus a buffer of a few hundred dollars. Other customers who did not have that luxury could suffer greatly if they missed one small transaction and it would send things in the red. It is deceptive practices, and should not be done. But hey, those bank CEO’s have it hard nowadays. They have to penny-pinch, too. I mean, we have to take pity on them “jet-pooling” their private jets instead of using the whole thing themselves to make that flight to Nice for the weekend. Times are tough, and we need to look out for them.

    /facepalm

    Bank CEO’s are all asshats.

  9. Jason says:

    When I worked at Wells Fargo, many states had laws that were low to high. California’s stated banks could do low to high or high to low but had to inform the customer at time of opening the account and re-inform them yearly which they do in that little manual they give everyone that no one reads. We were even told at the time by Wells Fargo that this was done to increase fees but to inform the customer that larger checks are generally more important, rent, mortgage, car payment, etc.

  10. George4478 says:

    Is that chart messed up? I thought the “before” was low-to-high order?

  11. Guppy06 says:

    The most important part of the article:

    “This is a fraction of the $1.8 billion in overdraft fees that the bank collected in California from 2005 to 2007, according to the court.”

    This isn’t a fine, this is a 10% tax. It’s not a punitive fine unless the bank actually loses money when they get caught.

  12. yessongs says:

    BofA screwed me over for years doing this. I’m glad I got rid of them. I hope they’re next….

  13. brinks says:

    I got nailed by this practice at my own bank when I was young, poor, and stupid. There’s nothing like waking up and realizing you’re account balance is -$200 because of spiraling fees (a ton of overdraft fees draining your account, then you get hit with the insufficient funds fees). If they had cleared the transactions in the reverse order, I would have had one overdraft fee and still had money left in my account.

  14. Warren - aka The Piddler on the Roof says:

    So who gets the $203 million?

  15. ShruggingGalt says:

    If it’s a California judge, it’s going to be overturned.

    The Federal Reserve has jurisdiction and they’ve already said that banks can process payments anyway they want, so long as they inform the customers in advance. Which they do – via the small print depositor agreement.

    • mirrorball says:

      It’s a federal judge in California. From the original article: “U.S. District Court Judge William Alsup …” So this was a case under federal, not state, law.

      The lede for this post is misleading/incorrect.

      • ShruggingGalt says:

        In that case, Wells Fargo needs new attorneys. The article/tidbit said they provided no evidence for the order of clearing checks, yet the Fed Reserve has already addressed this!

        • hansolo247 says:

          CA federal courts roll up into the 9th circuit. The 9th circuit gets overturned almost every time.

        • RvLeshrac says:

          The issue is that most banks *don’t* disclose this, unless you directly question them on it.

  16. peebozi says:

    this is outrageous! how dare this judge infringe on a bank’s opportunity to derive customers of the luxury of having their rent check clear and only lose the subsequent NSF fees!!!!

    for more outrage…. bankoutrage.com :-)

  17. peebozi says:

    Banks made $38 Billion on overdraft fees in 2009. Wells Fargo probably made more than $203 Million so, as far as there VP’s and shareholders are concerned, THEY WIN!!!!

    profit is the sole responsibility.

    morals and ethics, if not able to show a profit, are discarded and unneeded.

    • failurate says:

      I am guessing the judgment was limited to what the bank made in California using this shady practice… which was still probably a heck of a whole lot more than $203 million.

      I wonder how much of this WF will actually end up paying. Are not these cases usually greatly reduced via settlement before or after the appeal process begins?

    • Griking says:

      Big lols for everyone when they end up paying this fine with government bailout funds.

  18. smo0 says:

    It’s not just wells fargo… my credit union does the same thing.

    I really don’t like people advocating like their some god-sent.

    They are just as greedy in their practices as the mainstream banks, these days…. the only thing is there aren’t “general account fees.”

    I suffered from this when I had the OD protection.

    I now space out my purchases or at least give them a few days to actually POST to my account… and I’ve long canceled the OD protection.

    If you put your money in any institution that’s designed to HOLD your money… you are not safe… I’m just gonna say this now.

    • Buckus says:

      Agreed. My credit union has been acting all high-and-mighty. Hell, the free checking that I opened with 15 years ago isn’t even offered to new customers anymore. They need a min balance or something now. Getting too big for their britches, they are…

      • smo0 says:

        Greed knows no bounds… it’s affecting all banks and credit unions….

        no where to run, no where to hide….

    • ExtraCelestial says:

      ING Direct!!! My transactions post almost instantly (and I receive an email when they do. I often buy something and as I’m leaving the store, my phone alerts me to the new email) ALWAYS in order of purchase, no questions asked. And not only is it free, they pay me interest.

    • tbax929 says:

      Thanks for saying this. I’m so tired of people advocating credit unions as if they’re any better. They’re not. FTR, I bank with USAA. I don’t know if they’re any better either, but after dealing with horrible banks and horrible credit unions I’m actually happy with my bank for the first time in years.

  19. bosozoku says:

    Here we go again…
    The ‘government’ stepping in to tell the general population they don’t need to worry about keeping a check register, spending money that isn’t theirs, etc…
    This is just another step in the ‘dumbifying’ of America. Gen Y and their offspring will know nothing about accountability and being responsible for themselves.
    If you want to see our future, check out ‘Idiocracy’ (http://www.imdb.com/title/tt0387808/).

    Have I gotten overdraft fees in the past? Yes. Did they cost a lot of money and make my short-term situation worse? Yes. Did I learn that I needed to take responsibility for my spending habits? YES.

    It’s a tough lesson for some, but if you refuse to do simple math and ensure you have funds available in your account prior to spending it, then you should not rely on a bank to manage your funds.

    • qwickone says:

      That doesnt really make sense. If you only had one transaction that would lead to an overdraft, but they restructured your transactions so you ended up with 4, why is that ok? I totally agree, you should learn your lesson the hard way and pay for the one overdraft, but why should the bank be allowed to charge 4 of them??

    • ExtraCelestial says:

      “The ‘government’ stepping in to tell the general population they don’t need to worry about keeping a check register, spending money that isn’t theirs, etc.”

      When was this exactly?

    • Hobz says:

      Here we go again…

      Corporate America stepping in to take you for everything you own with out telling you exactly what your getting yourself into.

      I mean really? You don’t see a problem with a bank offering a service to get you out of a bind but operating it in a way that forces you to pay more than you actually should?

      Example:

      Account Balance: $200

      Transaction 1: $10
      Transaction 2: $5
      Transaction 3: $20
      Transaction 4: $30
      Transaction 5: $210

      *Transactions in order of when they were made on the same day.

      Over draft fee’s by WF $175 instead of $35.

      Because WF processed the $210 transaction first and not the transactions in order. Now how is that right?

    • LandruBek says:

      Just to pile on a little bit — yes, you need to take responsibility for your spending, but there’s no way to take responsibility for the bank acting like the flow of time itself has been scrambled, so that ONE mistake magically turns into SEVERAL.

      I make my own time-scrambling sense of responsibility at home, though.

    • Pax says:

      Right.

      So, I look in my check register, and see that I should have a balance of $625. I deposited my $750 paycheck YESTERDAY. There should be $1,400 in the account.

      I write a check for the Car payment, $350, and bring it right to my bank.

      Rent is due, so I write check for $1000.

      Total debits? 1,350. Balance and total credits? $1,375. All transactions done in the exact order listed above, one per day. That SHOULD all be just fine and dandy, right? I should have $50 left in the account, after all is said and done …. right??

      WRONG. The “oh so important” rent check is posted first – it overdrafts by $375, and a $35 fee is assessed; my balance is now. -$410.

      The deposit clears, bringing my balance back up to $340.

      Then the car payment posts, and is overdrafted by $10 … triggering another ovedraft fee. Balance plummets to -$45.

      How exactly is a check register going to save you from that??

      • noahproblem1 says:

        The deposit shouldn’t be put into the register until it clears, and checks shouldn’t be written/debit cards shouldn’t be used until the money is available.

        I’m not a big fan of deposit hold times, but they are what they are.

        • Pax says:

          And how are you to magically know when that deposit clears, exactly?

          • noahproblem1 says:

            You call the bank/go online to find out.

            • Jedana says:

              Yes, you should. I agree. But what do you do when the bank changes the rules for no reason?

              I had a paycheck, drawn off of a BOA account, that I desposited into MY BOA account on a Wednesday. It posted the next day. Great, fine…until the next paycheck, which (posted on the same day of the week, Wednesday) to wait until Tuesday the next week to clear. The next couple paychecks went the way of the first one, right in. And then one that took the 2nd route.

              Also, we’ve had Wachovia and BOA both hold direct deposits…not ones recently established, but ones that had been there for months (or in one case, over 2 years)..and then the holding of the IRS tax refund check or my husbands’ disability check. We get confirmation the money went into the bank, and we have to wait 3-4 days to get it from our banks. (I did confirm that with our banks; I was told they were holding it “to make sure it processed correctly”)….funny though, it was the same paychecks that would have the car or rent payments on them, and would need to have those in that account to make the payment….

              Yes, people should never spend more than they have. Everyone makes mistakes; my problem is that they show a lack of consistency and change the rules every chance they get. If you aren’t watching, you’ll get screwed.

            • Pax says:

              Then, that’s not using a Check Register. That’s GETTING A BALANCE CHECK.

              The two are not the same thing.

    • smo0 says:

      Have I gotten overdraft fees in the past? Yes. Did they cost a lot of money and make my short-term situation worse? Yes. Did I learn that I needed to take responsibility for my spending habits? YES.

      I would like to say… no.
      I’ve never had debit overdraft fees prior to 2007.

  20. Buckus says:

    So, for the poster yesterday who said that “Buy-and-bail” is “Gaming” the system…I present to you unrefutable evidence that the “Gaming” was started by the banks…

  21. DanKelley98 says:

    They suck. Plain and simply. And they don’t care.

  22. vastrightwing says:

    I have made it my business to not pay banks by being very diligent in keeping enough money in my account so I don’t overdraw. I stopped all my auto bill pays. Now I look at my balance and pay the checks I can pay and defer the ones I can until there’s more money. It was convenient to use my overdraft account to pay everything automatically and not worry about paying fees. But now that RBS Citizens changed their TOS to hit me with $5.00 fees each time I borrow money (plus pay interest), I’ve stopped this practice and gone back to the old fashioned ways.

  23. scurvycapn says:

    PROTIP: Don’t spend money you don’t have and you won’t get in this mess. If you are living paycheck to paycheck, use cash so that you don’t end up with all of these ridiculous fees.

    • LandruBek says:

      While that’s true, that’s not the point. If you never ever screw up, high-to-low doesn’t matter. The fact is that people do screw up, and there should be some fairness regarding how many times they have to take, er, “a wooden stick in the can hole,” if you get my meaning.

      • Pax says:

        Even if you DON’T screw up, in some circumstances, high-to-low can still screw you:

        I look in my check register, and see that I should have a balance of $625. I deposited my $750 paycheck YESTERDAY. There should be $1,400 in the account.

        I write a check for the Car payment, $350, and bring it right to my bank.

        Rent is due, so I write check for $1000.

        Total debits? 1,350. Balance and total credits? $1,375. All transactions done in the exact order listed above, one per day. That SHOULD all be just fine and dandy, right? I should have $50 left in the account, after all is said and done …. right??

        WRONG. The “oh so important” rent check is posted first – it overdrafts by $375, and a $35 fee is assessed; my balance is now. -$410.

        The deposit clears, bringing my balance back up to $340.

        Then the car payment posts, and is overdrafted by $10 … triggering another ovedraft fee. Balance plummets to -$45.

        • LandruBek says:

          That sucks indeed, but I was taking it as a given that a bank will sit on a deposit as long as they can before increasing your balance. It’s another rotten game they play, but one that unfortunately I’ve been conditioned to accept.

    • Rectilinear Propagation says:

      Yes, because clearly people who overdraft are doing so on purpose. /sarcasm

    • tbax929 says:

      Somehow I don’t think my property management company will accept cash for my rent. Neither will USAA for my car payment. Nice try, though.

  24. wonderkitty now has two dogs says:

    OHMYGOD. FUCK YES! This high-to-low business is ALL BULLSHIT and has screwed me so many fucking times I could vomit.

  25. BeerFox says:

    I just have one thing to say to banks in regards to their justifications for high-to-low processing, overdraft protection, and other fee-trawling schemes.
    “Don’t whiz on my leg and tell me it’s raining.”

    I’m sure National City had a similar reason for holding my *cash* deposit for several days before crediting my account, thus allowing several checks to bounce. I bet they were heroically protecting me from, oh, let’s say africanized honeybees. Can’t be too careful, y’know.

  26. Griking says:

    Didn’t Wells Fargo need a $25b cash bailout from the government? So who’s actually paying this $203 million?

  27. Opdelt says:

    TCF Bank does this nonsense too. Regardless of when the transaction is processed on their end, at the end of the day the transactions will be processed from the largest to the smallest.

  28. agold says:

    How are they doing the payouts?

  29. Chip Skylark of Space says:

    Scummy bastards. I hope other states follow their lead in this. Seeing how Northwest bought Wells Fargo a few years ago, and moved their HQ to California, I hope Minnesota follows this ruling with one of their own. Yup, these clowns are where we bank.

  30. Hobz says:

    The problem is the checks did not bounce, they were covered by Wells Fargo and the Overdraft Protection the offer. Meaning that Wells Fargo floated the money and charged a fee. No where in their Overdraft Protection FAQ do they mention in what order they will process the incoming charges.

    This seems to me to be a rather large over site and could be construed as predatory.

    https://www.wellsfargo.com/help/faqs/odp_faqs

  31. jayde_drag0n says:

    YAAAAAAAYYYYY!!!!! I can’t stop giggling! This is incredibly awesome, and i just cannot wait for fallout to other banks who perpetrate this crap

  32. JaySherman says:

    So in other words, do what ever you want and the “evil banks” will have to follow? Another instance of personal responsibility going out the window.

    Whether or not banks may pay the overdrafts, they issue the fee as a deterrent. To encourage the person to actually be responsible with their money and do the right thing.

    Each time the bank covers an overdraft with no fee, it’s the equivilant of an interest free loan.

    Obviously one fee wasn’t getting through to many consumers so they did more than one. Fact is, it’s irrelevant how the bank processes your debits and credits if you have enough money in your account to cover debit/check purchases and don’t spend money you don’t have.

    I’ve heard of people paying for something even though they have outstanding checks because their paycheck would be in the bank later in the week and they thought they could beat the system. When the stuff bounces, they blame the bank saying “They know I have a deposit going in tomorrow”

    I don’t make a lot of money so you could say at times I live paycheck to paycheck. I bounced a check once……ONCE. And learned a very hard lesson. You bet I never did it again.

    • Buckus says:

      Obviously, you haven’t been paying attention. Yes, personal responsibility is out there somewhere. But let’s say you had a $30 balance today, deposited a check for $500 in the morning, then had lunch ($10), then an afternoon snack ($5) then bought an IPOD($300) then a few other transactions for a couple hundred. Then the bank decides to process all the debits first, high to low (incurring several overdraft fees) then the deposit. Nothing was not paid, but you got dinged for several overdraft fees. This is why they’re standing outside asking customers to opt-in to overdraft, leaving cryptic messages, flooding the mailboxes and email inboxes with pleas to opt-in…

  33. INsano says:

    I’ll be waiting for the class-action on this one for Oregon. Those fuckers still owe my G.F. $105 in overdraft fees(3X$35).

  34. wjstone says:

    How about they just deduct the amount in the order that it was spent?

  35. ajlei says:

    Here’s an idea.. process it in the order it was received, not some re-sorted order.

  36. RosevilleWgn says:

    They need to do this to BofA as well.

  37. kimmie says:

    They finally admitted it! I am guilty of overdrafting on too many occassions. I’ve called to complain about the order of overdrafts before. I know, it’s my fault, but they just make it worse!

  38. giantspbpk says:

    What about processing the charges in the order they are made?

  39. ShinGetterPoPo says:

    I wonder when they’re going to go do the same to Bank of America. That’s why I closed my account with them in the first place.
    They didn’t seem to understand the logic behind the following.
    I’d rather have a single 35 dollar return and go talk to my landlord about fixing it than have 7 35 dollar returns and be nearly 250 in debt for a series of small things.

    • Awesome McAwesomeness says:

      Hmmm. I’ve been with them for years and had my first overdraft yesterday. It was totally our fault, and yet without a call, they managed to process small to large and apply my savings transfer retroactively.
      Generally, a good way to guard against overdrafting is to wait until deposits clear, then only write checks for the money you have. If you do that, you will be guaranteed not to overdraft.

  40. Awesome McAwesomeness says:

    I would prefer high to low as well if I bounced checks. I know that sometimes miscalculations occur that cause people to overdraft. I had my first yesterday due to miscommunication with my husband. It was for $9.36. I transferred money from savings right away and Bank of America ended up applying my deposit and recalculating my balance based on my deposit and my overdraft disappeared–no fee.

    I was really surprised that BOA was so merciful. I feel like I am the only person who doesn’t have a single complaint about BOA.

    • Pax says:

      If you had only needed to move $8 from savins to checking, to wind up with a one-dollar balance after that $9.36 happened?

      You’d’ve been screwed, because $9.36 > $8.

  41. PupJet says:

    One good thing with my bank is that they do process in the order they are received *Wipes brow*. At least that way if I KNOW I am going to be in the red with a payment, then I am going to be hit by it and hard, so if it’s an important payment, make it first. LOL

  42. Levk says:

    Wachovia does that to, i hate that bank >> well not what this bank does but there system is messed up really makes it so you overdraft not once but a few times

  43. elislider says:

    Bank of America has done exactly this for years and its resulted in multiple successive overdrafts for me on a few different occasions (as a student). fuckin banks

  44. cmp179 says:

    I really don’t understand why the judge said that most banks process transactions in order of low-to-high. Does anyone know of even one bank that does this anymore? I use ING Direct, so fees aren’t really an issue for me, but even they process transactions in high-to-low order.

  45. Dre' says:

    Wells Fargo also recently started charging an extra $2 tacked on to your monthly service charge if you’ve been getting pictures of your cashed checks on your monthly statements. I had to call them up to make them stop sending me the prints. Keep in mind this was a feature that has been the default on printed statements for years, was never signed up for in the first place & the notification to the change was in small print in hard to understand legalese on the back of the most recent “Changes to Your Account” statement the send out months ago.

    Bastards.

  46. Segador says:

    Wells Fargo did this to me for years, and finally I closed my account after they allowed 3 overdraft fees of less than $2 turn into over 30, charging me $700. Granted, I should have been more aware of what was in my account, but it was ridiculous.

    USAA rocks, btw.

  47. DoktorH says:

    Every bank I’ve ever dealt with has processed transactions high to low, going as far back as the 1990s. The bank I work for does this and always has. the little credit union I bank with does this. I have yet to find a financial institution that doesn’t run things high to low on any given day.

    All these places notify the customer in the deposit agreement that transactions posting on any given day will run high to low. The customer is informed up front of this, and needs to keep it in mind when making transactions – i.e. not make one big overdrafting transaction when they have a bunch of smaller transactions that haven’t posted to the account yet.

    If keeping track of their own transactions is too much work for someone, they should stick to cash.

  48. freeformed says:

    Happened to me with Wells Fargo and snowballed to $500 in the red, 90% of which were fees. I cancelled account next week and moved my business to USAA, have never looked back!

  49. khooray says:

    US Bank has been doing this to me for years and they’ll bleed you dry and not blink an eye. I can’t believe only ONE bank has been ‘caught’ and penalized for it!