Customers Affected by Excessive Overdraft Fees

Dallas, TXIt may seem simple enough to stay out of overdraft in a bank account, but some bank customers say they are being forced into overdrawing their accounts and then paying excessive overdraft bank fees as a result. They say bank practices such as holding check deposits and reordering transactions are costing them dearly in excessive overdraft fees. At least one law firm, Tycko & Zavareei, is investigating regional banks to determine if those banks use the same practices alleged at larger banks to generate excessive bank fees.

"We are continuing to investigate several banks around the country," Jeffrey Kaliel, of Tycko & Zavareei, says. "Customers must be compensated for bank practices that caused hundreds of millions of dollars in improperly charged fees."

According to Kaliel, the law firm's investigation includes the following:

Silicon Valley Bank
Cathay Bank
Umpqua Bank
First National Bank Alaska
Alpine Bank of Colorado
First Hawaiian Bank
Bank of Hawaii
American Savings Bank
Central Pacific Bank
Mountain West Bank
Sandy Springs Bank
Columbia Bank
Eagle Bank
Eastern Bank
Bremer Bank
First National Bank of Omaha
USAA Savings Bank
Beal Bank Nevada

So far, no lawsuits have been filed against these banks. The law firm is simply conducting an investigation to determine if any wrongdoing occurred with regards to regional banks improperly charging overdraft fees.

Although overdraft fees may seem straightforward—never spend more money than you have in your account or you will be charged a fee—in reality, there are some alleged bank practices that could push even the most conscientious customer into overdraft.

One such practice involves holding check deposits for inconsistent periods prior to posting the deposits into a customer's account. Many bank customers realize there is often a lapse between the time they deposit a check into their account and the time the funds are released to their account. In some cases, however, banks are accused of holding checks for varying times, so customers are not certain when the funds are released ( or "cleared")—or the customer thinks the funds have been released when they have not.

So, the customer goes out and spends money based on when he thinks the funds are released to his account, only to discover that the funds were not released and his account is in overdraft.

Meanwhile, some banks are accused of reordering transactions, putting the transaction in which the most money was spent first, so accounts are pushed into a higher number of overdraft transactions than they were actually involved in. Customers are then charged an overdraft fee for each transaction.

As of August 15, 2010, customers will have a say in whether or not they have overdraft protection—at least for ATM and debit transactions (new legislation designed to protect consumers does not extend to payment transfers or checks). Customers who enroll in overdraft protection could still find themselves facing massive overdraft fees, some as high as $35. Those who opt out could face situations where their transactions are declined—but they will not be paying $45 for a $10 lunch.