Overdraft Fees: A Cash Cow For Banks
How Banks Benefit From Overdraft Fees
Overdraft fees are the fee that is incurred by banks from customers who overdraw from their accounts. In America, credit culture is mainly responsible for this issue. Many people, for various purposes, but mainly for shopping, overdraw from their bank accounts. However, there are also genuine reasons such as sudden medical expenses.
As a result of a high number of people overdrawing their accounts, banks earn a lot from wrongfully charged overdraft fees as well as NSF Fees.
How Deep Does The Problem Run?
According to a 2009 report, it showed that over $37 billion were earned from overdraft fee charges. The fee was assessed on ATM transactions as well as debit usages for the year. For consumers, the fee can add up, especially if the NSF or overdraft fee assessed is more than one. Or, in case the bank reorders the transactions for maximizing their total overdraft fee collection.
Reasons For The Overdraft Fee Debacle
How Bank’s Overdraft Laws Came To Notice
A lot of consumers who were assessed for overdraft fees, accidentally overdrew from their accounts, as cited by the agency Credit Karma, and this led to the media and consumer’s attention being directed at the wrongfully charged overdraft fees by banks.
No wonder, the bank was taken to court and dealt with, with the help of attorneys like Shamis & Gentile, P.A.
What The Banks Should Do
If the banks and credit unions want to use the overdraft fee program, they should have the opt-in contract include the provision for the overdraft policy for the consumer and the information on the availability of alternatives. Also, the bank cannot use consumer consent for other purposes except opting in to an overdraft program. The opt-in consent should be obtained separately from the client’s other consents and acknowledgments.
The Class Action Lawsuit In Question
An Assessment Of The Lawsuit
The lawsuit in question seeks restitution and monetary compensation as well as injunctive relief which is associated with wrongfully charged overdraft fees. The lawsuit in question accuses the financial company Alliant Credit Union of assessment of NSF fees (overdraft fees) on transactions where the accounts of the consumers did possess enough money for those transactions to be completed. Moreover, the credit company has also been accused of charging NSF fees multiple times in the same transaction carried out electronically. According to the plaintiffs, this is a violation of their contract with the credit union.
Accusations Of Improper Actions
In addition to the allegation that the company took illegal actions when assessing the overdraft charges, the company has also been accused of wrongly describing their overdraft service in the crucial opt-in contract. Banks and credit unions are legally provisioned to use overdraft programs as long as they can get proper consent from the consumers to opt into it.
However, the credit company in the specific lawsuit has been accused of not obtaining proper opt-in from their customers and also failing to explain to them the method through which they assess their overdraft fees.
Also, as per the overdraft fee lawsuit, Alliant Credit Union is counted among the biggest credit companies in the country which has assets of more than $11 billion across the United States. Their customers are also allowed checking accounts, which also includes the use of debit cards. The overdraft fees represent opportunities for generating good revenue by the credit companies and banks.
Wrongfully Charged Overdraft Fees
Without a further speck of doubt, the huge corporations in the form of the credit companies and banks are fleecing their customers through wrongfully charged overdraft fees. And not so surprisingly this has been going on for years. In many cases, the customers haven’t overdrawn from their accounts and yet they are receiving wrongfully charged overdraft fees and NSF fees.
So what is the solution to this problem? The solution lies in doing exactly what people did in the mentioned case study. That is, file a litigation against the credit companies and banks with the help of competent attorneys such as Shamis & Gentile, P.A.
In most of the cases, the clients can prove that they are correct through the electronic transaction data and by showing the account statement which states the deduction amounts.
If you too have been a victim of wrongfully charged overdraft fees or NSF Fees, you can contact Shamis & Gentile, P.A. today.