Chase Approves Transaction Anyway After Customer Declines Overdraft Protection

Paul opted not to sign up for Chase’s overdraft fee trap–oh wait, they call it “protection”–but Chase happily ignored this fact and approved a transaction anyway, which led to a $34 overdraft fee that they refuse to reverse. The loophole they’re using to get around Paul’s opt-out is that the vendor was someone he’d authorized in the past, and therefore this new transaction isn’t protected from the bank’s “protection” fee.

Paul writes:

After a previous instance of an overdraft problem, which Chase settled to my complete satisfaction, I made sure to sign the form stating I did not want the overdraft protection. If the money was not in the account, I made it very clear I wanted the charge to be declined.

So I was very surprised to see my daily email summary showed a $110 deficit after an $84 charge (which was unauthorized and later corrected) and a $34 overdraft fee.

Perplexed, I ventured out to my local Chase branch for an explanation. After some discussion with the customer service rep and a call to corporate, here is the explanation I received: since the unauthorized charge was from a vendor that I had dealt with before and had authorized in the past, they went ahead and authorized the current charge, even though the funds were insufficient and I had declined overdraft protection.

So I questioned, theoretically, every vendor I have ever dealt with could put through a charge and it would be paid whether I had sufficient funds or not, refusal of overdraft protection be damned? And the answer was yes. So I asked what was the point of having the option of declining the overdraft protection if Chase was going to ignore my decision anyway? I got a nice, blank stare in return.

I asked if I got the unauthorized charge corrected, would Chase refund the overdraft fee? The reply was since it was the vendor’s fault, they would have to refund the fee. It was at this point I asked to speak to the branch manager and was told she was gone and would not be back until Monday.

Rest assured, once I speak with the manager, whether the fee is refunded or not, I will be firing Chase and taking my banking business elsewhere.


Edit Your Comment

  1. jkinatl2 says:

    Wow, that’s not a “loophole.” That basically invalidates the entire “opting-out.”

  2. Loias supports harsher punishments against corporations says:

    Sorry, I’m not too privy to the intricacies of what happens without overdraft protection. Does Chase have a leg to stand on here? Is their excuse, although shady, rooted in legal ground?

    • YouDidWhatNow? says:


      • apple420 says:

        I was under the impression that recurring transactions are still allowed to cause an overdraft. Of course the article does not mention whether this was an automatic payment or not.

    • Rectilinear Propagation says:


      It wasn’t a debit or ATM transaction (the merchant initiated the transaction) so it isn’t covered by the new regulation regarding overdrafts.

  3. IphtashuFitz says:

    Close your account with Chase and find a better bank, or better yet a credit union. You’ll never win with Chase.

    • NYGuy1976 says:

      And go to what? A bank with 10 ATM v. Chase where in Manhattan you cant practically cross 3 blocks without bumping into an ATM. Anyway, this looks like a pre authorized transaction which is not part of the overdraft opt out.

      • Max5695 says:

        While Chase may have convenient ATMs in New York, there are many people all across the country who can live without having an ATM on every street corner. People can pay with credit or debit. Also, there are credit unions and banks that refund all ATM fees. There are many credit unions and banks that give better deals than Chase. For example, USAA for ATM refunds and Alliant Credit Union for free checking and savings accounts that pay you lots of interest every month.

      • Pax says:

        I bank with Jeanne D’Arc Credit Union. They have two offices, period. Theyhave ATMs in those two offices, period.

        But you know what?

        My Debit Card has a Visa logo on it. On hte back, it also has an NYCE loco, a PLUS logo, and a Co-op Network logo.

        I have yet to find an ATM that this card won’t work with. Not here in Massachusetts; nor in Florida, New York, the rest of New England, and points beyond. IOW, not anywhere I have ever gone with this card.

      • _UsUrPeR_ says:

        I belong to a credit union in Oakland County, Michigan. There are 3 branches, but they are part of the co-op network. The Co-op network is what every other credit union that I have visited in this state belongs to. Not only that, but all 7-11 ATMs. Because of that, I have payed less withdrawl fees than with my previous bank, Comerica.

  4. sleze69 says:

    This sounds like small claims court at a minimum and possibly a violation of the new law. Can anyone find a loophole that states previous relationships allow banks to overrule the wishes of their customers?

    • hansolo247 says:

      I bet they have studied the law.

      You know, the unnecessarily long law filled with many other laws, and many related and unrelated loopholes.

  5. vitajex says:

    Opting out does NOT cover recurring check card transactions. That is decided by a special code in the process of approving the transaction. If the merchant said this was for a recurring charge a la ISP, gym membership, etc., those transactions will STILL go through on the card, even with insufficient funds in the account.
    However, the fact that this transaction was reversed should give the bank a good reason to reverse the fee.

    • vitajex says:

      My advice is to file a Regulation E claim. The bank MUST reverse any fees found to be related to a merchant error.

    • quijote says:

      You mean if the recurring charge was begun before opting out, right? That doesn’t apply to recurring charges in general, I’m guessing, because I’ve had recurring charges declined which were begun after I opted out of “free account protector,” or whatever they renamed it. Either way, I wonder how they justify that.

      • vitajex says:

        It’s my understanding it covers ALL recurring charges. But again, the ‘recurring charge’ status is determined by the coding presented by the merchant.

      • Rectilinear Propagation says:

        You mean if the recurring charge was begun before opting out, right?


        The new regulation applies only to debit card and ATM transactions. You can still overdraft with online bill payments, checks, recurring transactions, etc.

    • apple420 says:

      I agree. Though it is not clear from the summary, it sounds like this was a recurring charge that the customer had attempted to cancel. But if the charge was not authorized then the fee should be reversed. Maybe they should have done a chargeback with Chase instead of contacting the vendor? I would assume if someone stole my card I wouldn’t be liable for overdrafts.
      But maybe the recurring charge was actually her fault, and the vendor was doing her a favor by refunding it.

      • ames says:

        Where are you getting that this was a recurring charge? I don’t see that, I just see that it was from a vendor that he’s used before.

        • apple420 says:

          I was just surmising a possible explanation. It’s not clear either way. If the charge really did come out of nowhere then Chase should refund the fee. Though they should refund the fee either way.
          If it was a charge completely in error then maybe a chargeback is the way to go if this type of thing happens.

        • DanRydell says:

          People often leave out details that they don’t think are pertinent. Savvy consumers who actually know what they’re talking about can read between the lines and figure out what likely happened.

    • jiubreyn says:

      Having been someone who was in the exact same situation as the above, Chase should make it VERY clear that transactions by vendors that have been approved in the past will continue to be approved whether the funds are available or not.

      Then again, it IS Chase we’re talking about and they have a fee for everything….

  6. danmac says:

    I’m going to jump in here before people start blaming the OP. Please note that according to “Paul”, the original $84 charge that caused the overdraft to occur was not authorized and was later corrected, so this wasn’t a case where the OP was completely ignoring his balance. Rather, a merchant error caused the account to overdraft and Chase didn’t really care to refund the fee.

    Of course, feel free to blame him anyway because his account didn’t have a fleshy bumper of cash with which to absorb erroneous transactions. I know you want to.

    • Gulliver says:

      I wouldnt blame the OP, but I wouldnt blame Chase either, Blame the merchant who put through the incorrect or invalid charge

  7. Jerry Vandesic says:

    Simple. File a complaint with the OCC. That will get Chase’s attention.

  8. Adam says:

    If it were me and the branch manager were unavailable, I would tell them that I’m going home to make flyers to distribute to EVERY customer that comes in the door the remainder of that day, or until the day the manager returns. I would do my best attempt to make every customer aware that they are basically scamming people…

  9. smo0 says:

    Good for you!
    I’ve heard that BS excuse before.
    But some months money runs tight and I have a netflix account… if I don’t have the money – it doesn’t go through so… I can only imagine it’s a bank’s policy….

  10. Tim says:

    If Chase reversed a fraudulent charge, they should most definitely refund the overdraft fee. That’s what’s important here (although the fact that it went through, despite the overdraft opt-out, is also important).

    • buckeyegoose says:

      I thought that the reason banks will reverse the fees associated with bogus charges is that the chargeback fee they charge the merchant covers that portion, as the bank NEVER eats anything the transaction is reversed to the merchant and their merchant account pays the bank for paying you, and the chargeback fee i thought covered the OD fee associated with that transaction.

    • Rectilinear Propagation says:

      Overdraft opt-out doesn’t apply to recurring charges.

      • apple420 says:

        But the article states that Chase would approve a transaction from any vendor they have visited before. So if you bought from McDonalds they would allow an overdraft if you have bought from McDonalds before.
        Of course that doesn’t sound like what happened in this case.

        • Rectilinear Propagation says:

          I’m guessing they meant that in the context of companies the OP had allowed to debit their account. McDonald’s wouldn’t (or shouldn’t) be taking money from customers outside of POS transactions.

        • Rectilinear Propagation says:

          I’m guessing they meant that in the context of companies the OP had allowed to debit their account. McDonald’s wouldn’t (or shouldn’t) be taking money from customers outside of POS transactions.

          • apple420 says:

            Yeah reading this article closely it is not even clear if it is a debit card charge or electonic transfer. A few extra details would really help this OP’s story.
            If this charge was just a random charge on their debit card from some clothing store they had visited months before, then it makes Chase look really bad. But there are other scenarios which put less blame on Chase.

            • Rectilinear Propagation says:

              If this charge was just a random charge on their debit card from some clothing store they had visited months before, then it makes Chase look really bad.

              Ah, that’s a good point. I’d assumed that an unauthorized charge from a merchant wouldn’t come through as a debit but that might not be the case.

  11. areaman says:

    This sounds like a conversation between a crack head and someone that cares about the crack head.

    “But I’m trying to top baby…. Wha!!!”

  12. myCatCracksMeUp says:

    I agree with the posters who said to file a claim, and also to find a new place to bank and cancel your account with Chase.

  13. Bativac says:

    Chase is a terrible bank. They are infamous for this kind of crap. My advice is to drop Chase ASAP and find a better bank or local credit union.

    I do not have any advice for OP’s current situation, other than to offer sympathy. Chase cannot be reasoned with. They are basically the insane supervillain of the banking world. Some banks cannot be bought, bullied, reasoned, or negotiated with. Some banks just want to watch the world burn.

    • ShruggingGalt says:

      So we should just burn the bank down? Or their pile of money?

      (+1 BTW)

    • Woofer says:

      Chase is the supervillain only because the rest of the league of somewhat annoying villains died off. I’ve yet to hear of a bank that’s not interested in making money.

      As far as advice to the OP goes, absorb the loss as a life lesson, destroy the debit card, and get an ATM-only card and a proper low-limit CC for your charges.

  14. Pam in Oregon says:

    Closing your Chase account won’t necessarily help either. My son had closed his checking account and Chase continued to put through a payment to his Chase credit card numerous times and cause it to overdraft, even though he had changed the payment account for the card bill and had THREE times verified that the account was closed. Other transactions were declined, but Chase themselves continued trying to take money from a closed account. Of course no one he spoke to cared or tried to help. It’s insane what they do and get away with.

  15. Mulva says:

    I would be contacting my state’s Attorney General so fast on this one.

  16. NeverLetMeDown says:

    I’m sure Chase will be crushed to lose your $8 checking account balance.

    • rpm773 says:

      Heh. But the word on the street is that the funds collected from overdraft fees are allocated to the office holiday party fund. If the OP leaves Chase, they’re not going to be able to keep that stripper for the extra hour. And that hurts.

    • runswithscissors says:

      WOOOO! I just *knew* we’d get at least one “trash the OP for not having more money” comment and you, sir, did no disappoint!

      You would have earned a bonus point if you’d also bragged about how much money you keep in your savings and checking accounts.

      • NeverLetMeDown says:

        No bragging here, just making the observation that someone with that little in his checking account is extremely unlikely (in the absence of overdraft fee revenue) to be a customer that any back would actually be interested in having.

    • vastrightwing says:

      Maybe not, but if they loose many $8 balance customers, who’s left? A hand full of $80 or $800 customers? Unfortunately, Chase won’t be following Blockbuster anytime soon. I say, go back to using cash. And keep it in your mattress: it’s safer.

      • NYGuy1976 says:

        Low balance customers cost the bank money, they probably wont care if you leave unless you overdraft a lot and make them serious income. Chase is mostly interested in their government, corporations and hedge fund accounts. Those can be in the 100’s of millions for a large client sitting in a checking account.

    • peebozi says:

      But that $8 in his checking is worth $240 the bank can lend.

      $8 * .25% APR = $.20 in interest the bank may pay the account holder.

      $240 * 21% APR = $60 in Interest income.

      That $8 lost the bank a 700% return, more or less.

      • hansolo247 says:

        Chase does not need deposits to lend.

        They get all the deposits they need, and get PAID INTEREST ON THEM, courtesy of Obama and his Federal Reserve Chairman.

        half of all chase customers could raid the bank, and Chase would be fine. Chase is a friend of the administration, as they are too big to fail.

      • Gulliver says:

        Your lending example is completely wrong, BUT lets pretend it is. He has a debit card (he didn’t pay for it), Chase is required to update his account, and usually send a statement (either electronically or through the mail), they have tellers who wait on him, and ATM system they pay for, a online site where accesses his account, a mobile banking option etc etc. So tell us about the HUGE profit again? If you wan to open a bank filled with $8 accounts you will die a quick death in the banking world. Why not try your business accumen somewhere else

  17. Hoot says:

    God, banks suck. Do they ever NOT suck? Ugh.

  18. RadarOReally has got the Post-Vacation Blues says:

    Recurring charges are not subject to the opt-out. Is this possibly not just “a vendor he did business with once before”, but truly a recurring charge, like a gym membership?

  19. Straspey says:

    The next time any of you has this type of issue and find yourself speaking to a real person at one of your local branches, instead of asking to speak to the branch manager, or threaten to contact somebody higher up on the corporate food chain, try saying this instead – with a polite smile on your face:

    “Well, if you can’t help me, perhaps somebody at the New York State Banking Commission can. I think I’ll give them a call.”

    Guaranteed – the banking rep will suddenly “discover” that because you are a “valued customer” they may be able to do something for you after all.

    And if you don’t live in NY, check out the local banking authorities in your state.

  20. rpm773 says:

    Slightly off topic.

    We decide to forego “Overdraft Protection”, as it’s called. Presumably, the transaction will be denied if we don’t have enough funds in our account. Great.

    What happens if the transaction denied after the goods and or services have been delivered, and they are of a nature where they cannot be “undelivered”, such as food and service at a sit-down restaurant? How does the vendor reconcile the issue with the customer?

    One wonders where this is all going to lead…

    • Rectilinear Propagation says:

      How does the vendor reconcile the issue with the customer?

      I guess the same way they’ve always done it when it turns out the customer can’t pay. I have no idea what that is though since I’ve never seen it happen. According to the television they make them wash the dishes to work it off but I think TV is making that up.

      • rpm773 says:

        That’s what I was thinking, but I’m not sure if they do that anymore. I think the dirty dish sinks at Starbucks can only accomodate so many people at one time. :P

        More seriously, maybe we’ll see a rise in pre-paying. You go to the restaurant, you sit down, you tell the server what you want to eat and drink, and then they run your ATM card right then…

        • selianth says:

          I would imagine in the case of a restaurant, they would want to keep something of the customer’s as collateral (a cell phone is the most likely option) until the customer can return to pay the bill.

    • apple420 says:

      I think if you are unable to pay your restaurant bill you could be looking at a trip to jail, unless you can make other arrangements. That would certainly make a $34 overfraft fee seem small.

  21. Rectilinear Propagation says:

    The new regulations only cover debit and ATM transactions. This transaction was initiated by a merchant, which means it isn’t covered by the overdraft regulations.

    You can still overdraft with a check. You can still overdraft with an online bill payment. Anything that isn’t a debit or ATM transaction can cause an overdraft even if you don’t opt-in to overdraft protection.

    Since Chase said they’d refund the overdraft since the merchant was at fault, they didn’t actually do anything wrong here unless the OP had previously instructed Chase that this merchant wasn’t allowed to debit their account anymore.

  22. spmahn says:

    Sounds to me like this is an ACH charge, which isn’t covered by the new law. Does Consumerist even investigate these things before they post this nonsense on their site?

  23. njack says:

    This seems highly illegal although IANAL.

  24. Ratran says:

    This is so not right. Any bank that does this type of shenanigans, should be fined by FDIC, or whatever agency regulates banks for $100,000 per violation. That should take care of our national debt or banks may actually stop being such crooks.

  25. I wumbo. You wumbo. He- she- me... wumbo. Wumbo; Wumboing; We'll have thee wumbo; Wumborama; Wumbology; the study of Wumbo. says:

    So they’re saying that if I buy groceries from the same vendor and I don’t have enough on my card, I may overdraft?

    • Rectilinear Propagation says:

      That would be a debit transaction (assuming you don’t pay for it by check) and wouldn’t allow an overdraft.

      The OP says this transaction was unauthorized so it wasn’t a debit transaction. If it showed up in Chase’s system as debit then they should have denied it but it doesn’t sound like that’s what happened. It sounds like what happened is that the OP had previously allowed the merchant to draw from their account. That type of transaction isn’t covered by the new regs.

  26. sopmodm14 says:

    approved in the past since its ok ?

    well, i had a lower interest rate, in the past, shouldn’t i get credit for that then ?

    subject to change, but not overdraft fees are also

  27. jiubreyn says:

    Yes! They did the exact same thing to me. I kept getting emails and letters in the post trying to convince me to sign up for the overdraft protection. Upon reading the fine print, you will be charged an overdraft fee if you do not deposit the funds THAT day.

    So I chose not to opt-in. I still received an overdraft fee. HOWEVER, in the fine print once again, they said they will approve or deny transactions at their discretion. Which means they’ll do anything they can to charge you a fee. (personal experience…not just with this policy..)