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Wells Fargo Excessive Overdraft Fees Lawsuit
Wells Fargo Bank and other financial institutions have faced allegations that they used deceptive practices in charging customers excessive overdraft fees. Federal rules that took effect in 2010 no longer allow banks and credit unions to charge overdraft fees on ATM or debit card transactions unless the bank customer agrees to "opt-in" to overdraft protection. However, banks and credit unions are still allowed to charge when checks or certain recurring electronic payments overdraw an account, even when the customer didn't opt-in to overdraft protection.
Attorneys have filed lawsuits, including a class action, against Wells Fargo, alleging excessive overdraft fees. Wells Fargo & Company, headquartered in San Francisco, California, is a financial services company with $1.9 trillion in assets. At the end of its third quarter in 2016, Wells Fargo ranked third in assets among US Banks.
Wells Fargo Overdraft Fees Lawsuits
A class action lawsuit Veronica Gutierrez et al v. Wells Fargo Bank NA, Case No. C 07-05923 WHA, US District Court, Northern District of California was filed in Nov. 2007, claiming that Wells Fargo charged customers "hundreds of millions of dollars in overdraft fees" and allegedly "devised a bookkeeping device to turn what would ordinarily be one overdraft into as many as ten overdrafts, thereby dramatically multiplying the number of fees the bank can extract from a single mistake," according to court documents. In 2010, a federal judge awarded $203 million to Wells Fargo customers for the class period between 2004 and 2008 in that class action. Wells Fargo appealed the award but in 2016 the US Supreme Court declined to hear the Wells Fargo appeal, effectively holding up the $203 million award.
In a separate settlement with federal regulators in Sept. 2016, Wells Fargo agreed to pay $185 million in fines and penalties after the bank's employees created and opened unauthorized accounts in order to increase the bank's fees revenue.
According to a Dec. 2016 consumer protection report published by the US Public Interest Research Group (US PIRG), reported overdraft and non-sufficient fund (NSF) revenue per bank account is on the rise.
Excessive Overdraft Fees
Out of more than 600 banks studied in the report, 10 of those banks accounted for a huge percentage (67 percent) of all reported bank revenue collected through the first three quarters of 2016.
The 10 banks that collected the most overdraft revenue through the first three quarters of 2016, in order, were: Chase Bank, Wells Fargo, Bank of America, TD Bank, US Bank, PNC Bank, Suntrust Bank, Regions Bank, Branch Banking and Trust, and Woodforest National Bank.
"These banks collected an average of $98 in overdraft revenue per non-retirement deposit account, more than five times the national average. Five of the ten banks would have seen a net income loss in the first three quarters of 2016 without overdraft revenue," according to the report.
Wells Fargo ranked number two in the top ten banks in the report, collecting $1,316 million, an average of $15.91 per account in overdraft and NSF revenue fees through the third quarter of 2016.
According to the report, Wells Fargo is the "most-complained-about-bank" in 15 states when it comes to "issues caused by my account being low." Wells Fargo also collected 10 percent more overdraft fee revenue in the first three quarters of 2016 than the same period in 2015, experiencing faster overdraft fee growth than any other Top 10 banks.
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I own a small business and and was recently enraged when i found out ive been charge almost $10,000 in overdraft fees since i opened my wells fargo account 5 years ago. The nature of my business membership revenue always makes me susceptible to being overdrafted at beginning of the month while waiting 5 business days for client sales to process. every once in awhile theyll agree to refund like one $35 charge a year which seems like nothing when ive paid 1-2k that year in fees.
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