Bank of America wins appeal on overdraft fees

[Amerigo Vespucci]

Source: The Los Angeles Times

The California Supreme Court unanimously overturned a billion-dollar class-action award against Bank of America Corp. on Monday, ruling that banks can collect overdraft fees from accounts in which government benefits intended for subsistence are directly deposited.

The ruling threw out a 2004 verdict by a San Francisco jury that found the bank violated state law by taking fees for insufficient funds from accounts set up to receive Social Security benefits.

The bank customers who had stood to benefit from the award included 1.1 million California residents receiving government assistance. James C. Sturdevant, who represented the Social Security recipients, said the award, with interest, would have cost Bank of America more than $2 billion.

He said banks earn about $40 million a year from overdraft charges and that some of the Social Security recipients in the suit lost 20% of their monthly income in a single day because of bank fees.

Read more: http://www.latimes.com/news/local/la-me-bank-america2-2009jun02,0,4121940.story

[Auggie]

1. So if the direct deposit is somehow botched, and the account

becomes overdrawn, the bank will collect a fee from the customer?

Figures the bank would come out ahead on this one. They almost always do.

[WriteDown]

3. Seems like if the deposit is botched..

you'd be able to sue the federal govt.

[aquart]

9. There's at least a 4-day window on SS deposits at my bank.

I'm never sure when it's coming.

[AtheistCrusader]

26. Not with BofA

They screwed up a transfer on me last month, and not only did they admit the mistake, but they reversed all fees, and are paying the NSF fees incurred by the people who cashed the checks.

The only thing I haven't done is inquire what this might have done to our credit score, and how maybe all record of it could be purged, if there is any information on it included in the score.

[Name removed]

53. Deleted message

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[DebbieCDC]

2. I fucking hate BoA

[Name removed]

54. Deleted message

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[Lagomorph]

59. Buncha thieves

[AllentownJake]

4. Surprised

Nope, the system is rigged against the middle class. Has been since Reagan.

We are no better than a 3rd world country.

[L0oniX]

21. Yea and how nice of Obama to be shmoozing up with the nancy witch.

[AllentownJake]

22. Obama will schmooze with any right winger he can

I think he has a I want everyone to get along and be friends complex. See we may fight but we are all good people!

[high density]

5. Here's a novel idea: don't overdraft your checking account.

It's crazy, I know.

[Rage for Order]

6. Be careful...

I've heard of people like you being termed "personal responsibility fuckwads" on DU before! :rofl:

[Eyerish]

7. Well aren't you just so perfect??

These aren't 22 year olds frittering away their money. These are retirees and disabled people who receive Social security. Because of the cost of meds and food and other items, sometimes these people literally have cents in their account right before they get their monthly allotment. If ANYTHING goes wrong, they are fucked. My mother is one of those people. Luckily this hasn't happened to her.

Try a little sympathy it might do you good sometime... :thumbsup:

[Rage for Order]

10. You don't have to be perfect to balance a checkbook

And if money is so tight for your mom, you could always cancel your OPTIONAL $50 a month internet connection and give her the money instead. I'm sure the $50 would make a HUGE difference in her monthly finances if her budget is really as tight as you say it is.

[Eyerish]

15. And what makes you think I don't?

So they make the inconsiderate comment and I'm the asshole...nice

[Rage for Order]

24. Because you said so

You said that if ANYTHING goes wrong with your mother's bank account, she is fucked. Apparently your statement wasn't exactly true.

[high density]

12. I understand plenty of elder abuse happens with seniors and money

I have seen it personally and it is a large issue. I also feel that ACH transactions are generally bulletproof, especially once they are set up and going. Now if the banks get together and decide to change routing numbers and account numbers on people just so that direct deposits start failing to build fee income, by all means, start up a class action lawsuit to punish them. However, I don't see how it's wrong for a bank to collect fees from overdrawn people who take social security payments. Perhaps some limit on the fees is necessary, but they probably do have to be significant enough so that customers don't try to use a checking account as a credit card.

[bbinacan]

8. Agreed. n/t

[Gormy Cuss]

11. Here's crazy

The court noted that an overdraft could stem from a bank's honoring a rent or utility payment before the government benefits have been deposited.

BofA gets to stack the deck in their favor and charge exorbitant fees even though a direct deposit is expected later that same day. What's really going on here is that BofA doesn't want this business but for whatever reason it needs to present the veneer of welcoming direct deposit accounts for government assistance recipients.

[Rage for Order]

13. Why is that crazy?

If a creditor presents a check on the account and there are not sufficient funds to cover the check it is returned as NSF. B of A can't assume that a deposit will be made to a given account later that day, or by midnight on that day, or whenever. They go by what is in the account at the time the demand for payment is presented.

Rather than blaming B of A, perhaps the account holder could schedule their bills to come out a day or two after the deposit is scheduled to hit their account, just to be on the safe side.

[Gormy Cuss]

30. See response 28 n/t

[timtom]

44. I agree.

The banks are the good guys. We're the slackers. A true no-brainer.
And we SHOULD be punished, darnit!

[high density]

14. Later that same day? BS.

During end of night processing, banks will process any deposits followed by the debits for the day, largest first. The banks may be slimy, and I am no fan of BoA, but there is not a bank in the country that processes direct deposits as you describe.

The "before the government benefits have been deposited" means there is at least a day gap involved here. The bank cannot predict when you will get a deposit. It is up to the account holder to know when their direct deposit comes in and time the payment of their bills accordingly.

[AllentownJake]

27. Fine I want our bailout money back. At 35% interest

because if I had the debt load they had...that's what they would charge me.

[Gormy Cuss]

28. Yes, technically it would be the next day when it happens overnight.

The banks know that direct deposits are pending for government assistance holders. Unless it's changed recently, the direct deposits for all account holders with the same type of assistance would be expected to arrive at the institution on the same day. If there is variable in the date the deposit is made, the bank is still aware of that as well. They chose to charge exorbitant fees (as much as 20% of the deposit amount)for what is essential a minor delay.

It's easy to say that it's up to the account holder to know when the direct deposit will come in and time payments accordingly, but there isn't leeway on some items like the day the rent is due and IIRC there isn't a mechanism for changing the date that the government issues the check.

[high density]

31. The rent comes due the same day every month

I don't know why this surprises some people.

[Gormy Cuss]

37. Yes, it does. When the government check doesn't arrive on that day, what's the way to handle it?

Living check to check means you don't have money lying around to pay that bill ahead of your direct deposit.

[Abacus]

50. It's apparent some of these folks haven't lived paycheck to paycheck on an hourly wage.

I remember having nothing more than cracker crumbs or a slice of ham for dinner. When you're living that close to zero, the margin for error is virtually non-existent. I don't mind the banks collecting some fees, but it's getting ridiculous. $7 -> $14 -> $30 -> adios, Wells Fargo.

[killbotfactory]

16. Stop being human

Humans make mistakes, so to stop making mistakes just be superhuman.

[AllentownJake]

25. You know I'd agree with you if BOA was held to the same standards

That they are holding little old ladies.

[high density]

32. I agree there needs to be more regulation on the banks

However, I do not imagine a scenario where BoA lets people overdraft their checking accounts for a day or two for free. They have a product that offers that feature if you need it. It's called a credit card with a grace period.

[AllentownJake]

34. That's all well and good

However, if BOA would fail tomorrow. I would dance.

I'm not going to lie, I'm biased. I want them to fail.

[ipaint]

38. They were maximizing fees by reshuffling the order of purchases

The example in the lawsuit showed at the end of the day BofA, when a customer uses their check card, does not debit an account in the order the purchases were made so that only the last purchase (in the example) would trigger an overdraft but they were reordering the purchases from highest to lowest and this way they could overdraw the account 3 times instead of just once. So instead of 32 dollars in fees they were taking 96 dollars. The people in the complaint were not looking for a refund of all overdraft fees just the ones that were the result of shuffling from highest to lowest.

The lawsuit also points out BofA could stop the overdrafts completely by not allowing withdrawals over the balance in the account which they have the ability to do.

http://www.illegalbankfees.com/bofa_complaint.PDF



I have an online account with a check card and I can't overdraw the account because purchases are denied if the money is not there. Every purchase is updated immediately. Hitting people with a fee of 32 dollars, 4% of their total monthly income is bad enough, they were socking them for 12% of their monthly income in fees as a result of "creative" re-ordering of the purchases. Scum.

[high density]

39. It's not "creative," it's highest first

This has been a standard practice for ages. It all goes down to my original post: don't overdraft your checking account and you won't have to worry about paying the fees. If you have enough money to cover your payments then it does not matter what order they are processed in.

[Sentath]

40. Not for ages, not at all.

and it is painfully unfair to process all the withdrawals before the deposits.

[high density]

45. Nobody processes withdrawals before deposits! NM

[mbperrin]

62. In the early 70s, a group of banks in Texas had to be ordered to stop doing just that.

Including the one where I worked.

Also, some depositors get fees waived by officers in the bank. So if you have a "friend", you are exempt. If you're a regular person, well, fuck you.

Also, banks will overdraw accounts by any amount, hundreds of dollars, to collect their own fees and charges, yet will not allow a 2 cent error on the part of the customer to pay the item.

Thank gawd I have not had to bank in the last 33 years....

[ipaint]

42. to the poor it does.

In your world everyone should have enough money to play the game the banks play. Many, many people don't.
Fundamentally I find something drastically wrong with a system that preys on those folks to the point of threatening their lives. Throw in the way the parasitic banks successfully shirk their corporate responsibilities to those same taxpayers, sucking up billions in taxpayer wealth to cover their own irresponsibility and those petty little rules and regulations set up to increase corporate profit at the expense of people's ability to access food, medicine and basic utilities are draconian and should be illegal.

But the world works perfectly for those who can still afford it so I guess a tough shit response would suffice.

[high density]

46. It's not a game

It's called having money in your account to cover the debits that are going to hit it. It is not rocket science. It is addition and subtraction.

[ipaint]

48. Banks reorder purchases by amount to increase fees.

I know some folks think corporations make rules and they aren't to be questioned or god forbid outlawed. I am not one of them and if a policy which is instituted solely to increase overdraft fees is unduly punishing whole classes of the poorest folks in society to the tune of 2 billion that is abusive and should be illegal. So yes it's a game.



Overdraft charges bring in big-time revenue for banks and represent one of the biggest slices of the short-term unsecured credit market -- bigger than credit card over-the-limit penalties and much bigger than payday loans.
http://www.huffingtonpost.com/2009/05/29/dem-lawmakers-ask-fed-to_n_209066.html


Unauthorized overdrafts strip $17.5 billion each year from checking account holders through high fees and unfair practices. Working people struggling to make ends meet bear the brunt of these fees.
http://www.responsiblelending.org/overdraft-loans/tools-resources/overdraft-abuse.html


Consumers receive overdraft loans when a bank or credit union lends them money to cover a transaction that puts the consumer’s balance in the red. In exchange for this loan, banks charge fees which average $34, even if the purchase was only a few dollars.

In the past, financial institutions would deny debit card purchases or ATM withdrawals if there wasn’t enough money in the consumer’s account. Recently, they have taken to routinely enrolling many of their account holders into expensive overdraft “protection” programs – an option customers generally don’t want and often aren’t even aware of. The banks then approve the transactions, imposing a hefty fee for each one.
http://www.affil.org/consumer_rsc/overdraft


Overdraft fees on debit card purchases and ATM withdrawals cost consumers $7.8 billion per year. For every $1.00 borrowed through a debit card overdraft, the consumer pays $1.94 in overdraft fees. Yet, as the Board notes in its proposal: “he consequence of not having overdraft services for ATM and one-time debit card transactions is to have a transaction denied with no fees assessed.” The consequence of coverage—to the tune of $34 per transaction—clearly exceeds the consequence of having a transaction denied.
Consumer preferences about overdraft coverage for debit card purchases are overwhelmingly clear: approximately 80 percent would rather have the transaction denied than have it covered for a fee, whether the transaction is for $5 or $40. Moreover, of the overwhelming majority who want a choice about whether their debit card and ATM transactions are covered, 80 percent would prefer opt-in over opt-out. We urge the Board to listen to what consumers have clearly said they want and prohibit overdraft fees on debit card and ATM transactions absent consumers’ express consent.

http://www.consumer-action.org/coalition/articles/opt_in_provision_must_be_included_in_consumer_overdraft_protection/



So either the paycheck to paycheck folks and the poorest elderly social security recipients find some more money somewhere so they don't overdraw their accounts and incur punishing fees or the banks just deny the charges and stop raking in excessive overdraft fees. Which would be better and easier for the human consumer struggling to eek out an existance on the bottom of the income ladder.

[Name removed]

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[xchrom]

17. recommend -- ya know if politicians, judges and courts keep fucking

the people in favor of banks -- i predict something bad could happen.

[L0oniX]

20. They are obviously not going to stop fucking over the people of this country.

[AllentownJake]

23. Define Bad

:rofl:

[Name removed]

56. Deleted message

Message removed by moderator. Click here to review the message board rules.

[ipaint]

18. Personal responsibility, that's funny.

Nowadays "personal responsibility" can be avoided only through purchasing a high powered lobbyist.



"The nine biggest participants in the derivatives market — including JPMorgan Chase, Goldman Sachs, Citigroup and Bank of America — created a lobbying organization, the CDS Dealers Consortium, on Nov. 13, a month after five of its members accepted federal bailout money.

To oversee the consortium’s push, lobbying records show, the banks hired a longtime Washington power broker who previously helped fend off derivatives regulation: Edward J. Rosen, a partner at the law firm Cleary Gottlieb Steen & Hamilton. A confidential memo Mr. Rosen drafted and shared with the Treasury Department and leaders on Capitol Hill has, politicians and market participants say, played a pivotal role in shaping the debate over derivatives regulation."

http://www.nytimes.com/2009/06/01/business/01lobby.html?_r=2&th&emc=th



Elderly people living on 800.00 a month government check, you bounce a check, mistake or not, well shame on you, no food/medicine/electricity for a week. Hope you learn your lesson.

[L0oniX]

19. Ah ...so when SS runs out of money Skank of Assholes will charge overdraft fees...

how nice for them.

[dixiegrrrrl]

29. When a banks triggers a NSF, the fees it charges instantly create a waterfall effect

of more NSF, more fees per NSF.
Happened to me ONCE, cost me 125.00 in fees for 12.00 check that did not clear, then the next check did not clear because the fee decreased the amount in the account, etc.
The bottom line was I actually was 12.00 short on my balance, minus fees.
And the bank...the local small town bank..MAILED me the NSF notice, did not call me, so of course the cascade continued. Never mind that i had way more than enough money in another account to cover the shortfall. And had banked there since 1993. Coming in once a week to deposit my paycheck.

Then they wondered why I moved all my excess cash to another bank and just use them for 4 checks a month. ( their credit card is still 9% )

[conspirator]

33. Laws written by the rich for the rich nt

[femrap]

35. Why do people bank with them?

Can't you find a small local bank or a credit union. Hell, I'd use cash before I'd give B of A any of my money.

[Name removed]

57. Deleted message

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[MadMaddie]

36. I just closed my BOA account today!! Good Riddance!!

[hamerfan]

49. Congrats!

On getting BofA out of your life. You are much better off for doing so. They have been out of my life for about 12 years now.

[MadMaddie]

52. Thanks!! Banking at a Credit Union now and I feel much better!

:hi:

[4_TN_TITANS]

41. Wouldn't expect any less these days.

Seriously, is there anything that the little guy can win at anymore?

[Blue_Tires]

43. the next ruling that actually goes AGAINST the banks will be the first!

this should surprise no one

[Vidar]

47. The banks always win.

[Name removed]

58. Deleted message

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[SOS]

51. Major error in this story

From the article:
"He said banks earn about $40 million a year from overdraft charges."

According to a recent study by the Center for Responsible Lending, the nation's 15 largest banks collected $17.5 billion dollars last year in overdraft fees.

And remember to memorize your banks check clearing policy. It's usually 2-3 pages of micro-printed legal text, available only by request in person.
Recently I was ripped off by Crapital One, not because I overdrafted, but because my check deposits had not cleared.

Hint: If you deposit with a teller at 1:45 pm, you will have $100 available next business day.
If you deposit at 2:15 pm it will take 2-3 days to clear.
Being unaware of these manipulations can cost you a lot of money.

[Sivafae]

60. But there are other problems that happen...

A friend of mine is on SSDI and for some reason when she submitted her rent check, the property manager charged her the full rent on a check written for maybe $200. The full rent is $2000. I don't know how the property manager was able to get more out of her bank account than what was actually written on the check, but that was clearly the bank's fault for releasing the money. But she was financially ruined for the month and had to live on her credit card. She was refunded all of the overdraft fees, but none of the interest she is going to have to pay when she used her credit card to cover her basic needs for the month.

And while it seems logical that you shouldn't write a check you can't cash, I find it absolutely insulting that banks are doing me a (dis)service by allowing transactions to go through when they know that there is no cash in the bank account. Especially on ATM transactions because they are instant. On credit purchases, it all depends on when other organizations ask the bank for money from your account.
I have also gotten caught up in the timing issue when it comes to deposits. It would seem logical that if you deposit a check and then go out and spend money on that account, the amount should be covered. Especially if it is a credit purchase because they are treated like checks (or at least that is what the banks will tell you when you open an account). If you go and deposit a check at 2p, and then go home and check your online statement @ 2:30p, the money shows as being posted to the account. But then you go to get yourself a burrito at 5p and you get fucked for an overdraft charge. My point is that they do not make it clear to the customer when their money is actually available to them. Even if it is cash.
Furthermore, some years ago the banks had changed the way checks go through. Instead of taking 2-3 days for a check to clear from one bank to another, it was changed to 24 hours or less. But the banks have not changed their policies to reflect the change in the speed funds are transfered from one bank to another. Checks have basically been changed into electronic drafts and are somewhat similar to credit purchases on your ATM card. So actually, the bank is getting the money sooner than they are telling you. But then will tell you that they are putting the funds in as a service to you, and that they have not received the funds yet. There is a striking lack of disclosure when it comes to banks' policies on deposits and purchases.
Also there is a discrepancy between when you make a deposit with a teller as opposed to using the ATM. Checks deposited with tellers are posted quicker to your account (usually) than if you deposit it in an ATM. And when you used to deposit via teller, the teller would tell you when the money would be posted to your account. They don't anymore.

As for Direct Deposit, one bank will make what is termed a pass on an account, it is up to the receiving bank to decide when to post the money to the account. Usually it is instant, but if there is an issue at the bank and the money was not available, you are the one who pays.

As you can see, I have had a lot of problems with the banking industry and overdraft fees. And would gather to say that most of the time, especially with corporate banks, it has to do with their rules that I was unaware of. All of which I have learned by calling and complaining.

[underpants]

61. "Loyal to the Bank of America"

REM 1986
http://www.youtube.com/watch?v=x2wET1OlK4Q


R.E.M. » Exhuming McCarthy Lyrics
Send “Exhuming McCarthy” Ringtone to your Cell
You’re beautiful more beautiful than me
You’re honorable more honorable than me
Loyal to the Bank of America

It’s a sign of the times
It’s a sign of the times

You’re sharpening stones, walking on coals
To improve your business acumen.
Sharpening stones, walking on coals,
To improve your business acumen.

Vested interest united ties, landed gentry rationalize
Look who bought the myth, by jingo, buy America

It’s a sign of the times
It’s a sign of the times

You’re sharpening stones, walking on coals
To improve your business acumen.
Sharpening stones, walking on coals,
To improve your business acumen.

Enemy sighted, enemy met, I’m addressing the realpolitik
Look who bought the myth, by jingo, buy America

"Let us not assassinate this man further Senator,
You’ve done enough. Have you no sense of decency, sir?
At long last, have you left no sense of decency?"

You’re sharpening stones, walking on coals
To improve your business acumen.
Sharpening stones, walking on coals,
To improve your business acumen.

Enemy sighted, enemy met, I’m addressing the realpolitik
You’ve seen start and you’ve seen quit
(I’m addressing the table of content)
I always thought of you as quick
Exhuming McCarthy
(Meet me at the book burning)
Exhuming McCarthy
(Meet me at the book burning)