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Study Finds Consumers Complain Most About Banks With Highest Overdraft Fee Revenue

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Washington, DCA consumer protection report has found a correlation between the banks that customers complain about most and the amount of revenue from overdraft fees and insufficient funds (NSF) those banks collect.

The 2016 report, issued by the US Public Interest Research Group (PIRG), analyzed more than 10,000 bank-related customer complaints submitted to the Consumer Financial Protection Bureau (CFPB) between March 2012 and November 2016.

The report found that over that time period, consumers complained most about Bank of America, Wells Fargo and Chase Bank in the Bank Account/Service category, concerning "Problems Caused By My Account Being Low." Of the top ten banks most complained about, nine were also among the top ten banks for collected overdraft and insufficient funds revenue through the first three quarters of 2015, according to the report.
Bank overdraft fees occur when you write a check, pay with a debit transaction or withdraw money from an ATM for an amount that exceeds your bank account balance. Banks typically charge around $35 for each overdraft fee.

"This relationship suggests that fees per account and complaints per account may be useful indicators for finding bank mistreatment of customers," states the report. "This relationship also supports the FDIC’s assertion that high overdraft fees may harm public opinion of banks, posing a 'reputational risk.'"

Overdraft fees are common but some banks' alleged excessive overdraft fee practices have prompted lawsuits from bank customers claiming that their bank rearranged the order of banking transactions in order to charge additional overdraft fees on subsequent transactions.

Shaina Dorsey, a Connecticut woman, sued TD Bank in January 2017 for damages of $5 million in a federal class action, alleging that the bank has a "routine practice" of wrongfully charging customers a "sustained fee" for overdrawn accounts.

In 2017, BOK Financial reached a $7.8 million class action settlement with former bank customers claiming excessive overdraft fees.

A class action was also filed in 2016 against Bank of Hawaii by Rodney Smith, alleging that the bank's overdraft fees were excessive. That lawsuit is pending in federal court.

According to the US PIRG report, bank overdraft/NSF revenue per account is "on the rise" and increasing," causing more people to become "unbanked," meaning they do not have a bank account.

"Households without a bank account miss out on important financial services, including safe and secure ways to save their money," according to the report. "Overdraft fees are one of many types of fees that can discourage people, especially those with low incomes, from getting or keeping bank accounts."

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READER COMMENTS


Posted by

on
I used to bank with wells fargo, chase, california Bank and they all over charge tremendous fees. Sometimes I felt other charges unknown were added and it was correct after going over past statements bringing to tellers attention that politely brought acct. Up to date.
I recently bank with BOA where fees also way over board in drafts, I may not realize at times thirty-five dollar hit for thirty-five cents, a dollar or even ten dollars or less they closed my acct. unfortunately
I feel it's ridiculous charges simetimes you have to borrow to pay bills in order to survive in this just getting by world of over charging everything.

Posted by

on
The name on the bank that I have my savings is BMO Harris Bank and sometime I overdraft for $5 and the insuficient funds fee are of $35 that I consider is an excessive amount.

Posted by

on
Currently I have been charged over $850.00 from TD Bank in overdraft fees and this has pretty much ruined me, making it impossible to pay many bills and forcing me to use credit cards to make purchases I would not usually use them for. I am so paranoid about being charged overdraft fees and have tried to switch banks but they will not release my money to a new bank. I have asked and asked and asked but they have refused to return the money. They claim they are not reordering the fees but this has ruined me. I definitely want to be included in any class action suit against TD BANK as just returning the overdraft fees is NOT enough given the how upsetting this is and the fact that I have had to use credit cards and now have to pay them including interest.

Posted by

on
I am in total agreement with this article and Banks need to be held accountable for the way they treat people who basically live paycheck-to-paycheck.

I, too, was a member of Bank of Hawaii and though It has been 11 years since I moved from Hawaii. The bank would reorder how checks or payments were received. This continues with the banks that I had accounts with. I still cannot find an honest bank. It is all about profit.

I would like to file a multi-billion dollar class action lawsuit against all banks based on the appearance of deceptive practice in the means of processing payments.

Posted by

on
I had bank of account with BOK Wells Fargo and Chase and yes I have been charged astronomical fees with these institutions and now that I no longer associated with them I feel that these fees or what ever dangers that has been put upon me is due For I have just close my account with Chase this year and I went back to regular debit card with the Federal Government and Net Spend for my direct deposits for I do not trust the banks and their methods for I have been charge hundreds and hundreds of dollars for overdraft fees which I agree they do prey on the low income for fear if they do not paid they will forfeit the monies from any monies that is deposit into your account to retrieved those fees, but I would like for someone to look into it for me.

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