Bank Overdraft Scam: Who Says Bankers Aren’t Creative?
Bank Overdraft Scam: Creative Banking Fee Report From A Reader
I had no plans of making an overdraft related post today, but one of my readers left a comment on my Overdraft Fees Ripoff article that really boggled my mind. To the point that instead of approving it as a mere comment (where it would be at the bottom of the page, with a lot less visibility) I decided to make a full-fledged post out of it.
Just as a little background information, the aforementioned “overdraft fees ripoff” article focused on the posting order of transactions, markedly the “biggest check first” principle that generates more overdraft fees (thus more revenue for the banks) than simply posting the transactions as they come. For more details, just refer to that post.
Here’s what Scott has to say on the subject:
This sort of thing has become common place amongst big banks and I personally find it extremely unfortunate. Here is what I feel is the number one problem with this. Many of you will not like this, but it’s true…People with no money…You know…the ones who don’t have enough to keep their account from being overdrawn…Those people do not matter in the eyes of big business. People who are not wealthy are looked on as immature children that need to be punished for not having enough money. Big banks don’t care what you think…what are you going to do…take them to court with your negative bank account?
A massive class action suit MIGHT get their attention, but they would just weigh out the millions a upon millions that make each DAY on overdraft fees and call it the price of doing business.
Unfortunately for me…I am one of these no account clowns who works from pay check to pay check…even more so now with the price of driving to work. In previous years…I had a Bank of America account. I got so fed up with their “creative accounting” that I closed the account (they could not possible care less of course) and I moved my account to Wells Fargo. At that time (quite a number of years ago). Wells Fargo was not pulling the overdraft scams. Well…they may have been, but it was not quite at the level that Bank of America was. I liked Wells Fargo because of this.
Why I liked Wells Fargo is really quite simple…and here it is…IF there is enough money in my account when a check I wrote arrives… then the check clears, and I am minus the amount of money I wrote the check for…Seems reasonable right?
Well…let me tell you their new tactic. I had exactly 502 dollars in my Wells Fargo account on the 14th. That very same day, I wrote a close friend of mine a check for 1000 dollars. Well…any fool would tell you that is not going to fly…but wait. I tell my friend not to deposit the check until the next day (the 15th)…because there is not 1000 dollars in the account and will not be until the 15th. He says “no problem”. My friend did not make it to the bank until the 18th (four days later)…So my account had 1,502 dollars in it since the 15th. Everything should go right through correct?
Sure…it went right through, but I notice that I am 35 dollars lighter than I should be. I go online to find out why…and I see that they have taken out 35 dollars on an overdraft fee. For what you ask? Well…when I wrote the check…I dated it for the day I wrote it (the 14th). When Wells Fargo got my check on the 18th, they seen that it was written on the 14th, checked to see what my account balance was on the 14th, discovered that I did not have that much in there on the 14th…So charged me an overdraft fee of 35 dollars.
The money was in there three days before the check was deposited. This is a new tactic. I have been doing things like this for years and years. I don’t over draw my account…I never do…This is their way of making people over draw that really never did. Very crafty.I decided to move to a small(ish) credit union. This of course will make ZERO difference to Wells Fargo…I am not trying to “teach them a lesson”…I just have no extra money…so I cannot afford them to steal even the measly 35 bucks from me. I went through all this with my new credit union…and they knew ALL about practices at big banks.
Do you know that Bank of America actually hires people to be online and discredit people’s testimony in forums JUST LIKE THIS ONE?
Yeah, that’s correct…There is a section of people who do nothing but damage control all day long on the internet. There are getting to be such a massive amount of complaints, that they are having trouble keeping up lately. I do not know if Wells Fargo has the same damage control group…but I assure you…if Bank of America has it, Wells will be soon to follow. This is nothing other than organized crime on a HUGE level. So huge that it’s legal.
So with that, I will end this. Good luck to all of you that have had your hard earned money stolen (and I really mean that)…My only advice is to find a smaller company (credit union) that value you as a customer (for now at least). There will be some draw backs to having a small credit union…but most of them won’t blatantly steal from you.
I suppose this post will test the water to see is There is a Wells Fargo damage control group on the net. I will not come back here to read responses, so there will be no defense of my statement by me. You as the reader of this will be able to determine a damage control post as opposed to a legitimate post. Good luck and my heart goes out to you all who are in the same boat.
At this point, I don’t know what to say. Personally, I haven’t been hit such a creative overdraft fee, so I’m leaving this one to my readers to answer. Comments anyone?
August 22nd, 2008 at 3:19 pm
Wow,
I’ve never heard of a bank pulling this one.. This can’t be legal can it? Unreal. I’ll keep this in mind…
barry
August 22nd, 2008 at 4:37 pm
Barry,
I’ve never heard of this either… From the looks of it, I’m going to have to do a little investigating and ask a few of my local bankers whether or not this is something a bank could get away with… I have myself been working in banks for 7 years but that was in my native country (Haiti), and I’ve never seen anything like that…
August 22nd, 2008 at 5:09 pm
Hello, I was just now looking for the very thing that Scott wrote about. I live in southern Washington. Wells Fargo did nearly the exact thing to me. The only difference being, I put the incorrect date on a house payment check. Apparently, my checking account was a few dollars short on the date I wrote on the check and they charged me 30 dollars. Not sure why 30 instead of 35, but that’s neither here nor there. This cannot be a legal action can it? I did call W.F to complain, the exact words after it had been explained to me were. “We did nothing wrong, but we value you as a customer, so I am removing the 30 dollar fee.” Which was nice, but, I feel it would have been even nicer if they had not done this to start with. I think that many of these banks know what they are doing is borderline illegal, so if you call and make a fuss, many of them will backtrack quickly. I know that does not make it alright but could be useful information in a pinch.
August 22nd, 2008 at 6:26 pm
Lenn,
Thanks for your input. It’s good to know that making some noise might actually get them to rescind the fee…
August 22nd, 2008 at 10:25 pm
That’s insane. I’ve never heard of anything like that.
August 25th, 2008 at 12:23 am
for the past cupple years ive been hit with semi big name banks whom all seem to have their bells and whistles polished to the T. They greet you in the normal way and just as of recent have gotten myself back into the working world with a hefty fist to the face by the financial institutes. I at first was banking with a well known PA bank known as north west savings it wasn’t so bad banking with them. their over draft fees were OK to say the least but they did do some crafty over drafting with me when i was banking with them. Then i started back in with my life having come back from collage and then i went to woodforest national bank where i was loosing money so much that every time i put money into it… it was only enough to cover the over draft fees due to the savear loss i was getting. 30 dollars per item on over draft plus a 2 dollar fine per each day it was over drafted… how could i be so nieve it was free checking. with all of their crafty wording they kept the fees at a hidden distance. to get a card to use daily 25 dollars a yr… to check your account on its amount 1.75 each time… and the list keeps going people! when will the torment stop? it comes to my attention something like this needs to stop. there is one place i know of that does account forgiveness but i bet its still the same every where i turn. I have since left that bank after they sent me to a national debt service where now i cant open another bank account tell that debt is gone… and on top of it all i have school debt. So yeah things are hellish to say the least.
August 27th, 2008 at 4:15 am
Wow that is a creative and borderline illegal trick! I must speak to my bankers to see if this happens in my bank too. It is outrageous! The fee may be only 30-35 bucks but that is not the point, the point is that they are resorting to such cheap measures because the cumulative profit will be a huge number! If they trick 1000 people like this in a year, they will still have 30,000$ in their pockets just like that.
August 27th, 2008 at 4:39 am
Walt,
I’ve never heard of it either… But t does sound like something that can be done, which is why I put it out there
August 27th, 2008 at 4:40 am
Benjamin,
We really have to be careful who we bank with, so that we don’t end up handing them all our money in overdraft fees!
August 27th, 2008 at 4:42 am
Gayathri,
I’m also planning on asking my local bankers to see if this is actually something that they do. Please feel free to come back and share what you find out. I just haven’t set a specific time to investigate the issue on my end
August 27th, 2008 at 4:12 pm
Hi folks. I ended up here looking for something other than what happened to Scott and Lenn. But it got me thinking of something that happened to me a few month back. I was certain that I had enough money in my account to cover a check I wrote. I ended up with an overdraft fee. The thing is, I must be honest, I get many over draft fees. I do not make much money and that I do make, I am not good at handling. So another overdraft fee was no shock to me. This one particular fee I received seemed incorrect at the time. But I moved on.
After reading what happened to Scott, I thought that might be what happened to me. Sure enough, that is exactly what they did. I went through my returned checks and a banking statement. They charge me because I did not have funds in my account on the date the check was written for, not when it was deposited.
I brought this up and was told that I was incorrect. It was explained to me much the same way a carnival worker explains how a game works. I got lost. She did remove the overdraft fee though. Along the same line of we’re not wrong, but I’ll fix it for you.
I am currently shopping for another bank. I specifically asked a question because of Scott’s post. If I have money in my account when a check I wrote gets here, will it make a difference what date is written on the check?
He paused and said, as long as there is money in your account when you wrote the check, everything will be just fine.
I said, no, not what I am asking. If a check I write on the 20th does not go into the bank until the 23rd, does it matter that I wrote a check on the 20th with no money in my account, even though there was money in my account on the 23rd when the check actually was deposited.
He paused again and said, Are you asking if it’s okay to write a check knowing there is no money in your account? The answer is no, that is not okay.
I don’t know if he ever understood what I was asking or if he was being obtuse on purpose. No matter, I did not bank there. I think there seems to be a trend forming here and not for the better.
I notice that Lenn said he was from WA. I too am from WA state. Not sure if that has any bearing on this at all.
August 27th, 2008 at 6:03 pm
Linda,
I remember, from my days of working in banks, that a lot of stress was put on the fact that it’s wrong to write a check knowing that there’s no money in your account. While that’s correct, I think it’s hardly a valid basis for charging an overdaft fee unless that check is deposited while the account still doesn’t have enough money to pay for it.
August 29th, 2008 at 1:20 am
Hey Wilfrid,
I’m back again. I discussed this article with the mrs. and she says it’s all b.s… now my wife is usually correct and of course she gets me to thinking. But I’m of the mind that I would have to actually see this with my own two eyes to buy it. I’m not calling anyone a liar but I just know how easy it is to get a small piece of wrong information and drive off a cliff with it. Have a good one.
bb
August 29th, 2008 at 1:29 am
Barry,
It wouldn’t surprise me if the Mrs. were right
Actually I’m just about to get a definitive answer on that one, and it too will be the subject of a post. Stirring up the debate was very interesting, though. I will get back to this shortly.
September 10th, 2008 at 2:55 am
Well I sure did get a surprise from Bank of America, whom I have been banking with for years. I get a balance report sent to me at least once every morning and I keep a check on my account all day long as I work at a computer all day. A couple of weeks ago I knew my account was very close due to some unexpected expenses. So I watched with extra care every day. Sure enough, along came an online purchase from a week earlier posting to my account and I saw that my account was going to boing. So I actually drove down to my Bank of America branch and deposited enough money to keep things in the black. I did this several days in a row. Vigilant as a hawk. I have been with this company for decades, been there before and handled it this was no sweat. SUPRISE!! later in the week I see five 35.00 overdraft fees. I actually see them while still pending and call my online banking agent and tell them I think I am a victim of fraud. The fellow says these 35.00 fee’s are pending so he has no idea what they are, and that I should wait until the next day. (right, he has no clue, ah huh.) Well I sure did not anyway. So the next morning I am right into my account online. Holy cow they are overdraft fee’s. And there are three more of these pending 35.00 charges showing. Wow I’m fired up. I call in and ask what in the world happened. I told them how I had paid attention every day, they were able to see that I had made deposits three times during the week. Yep they said, but told me that they had changed their policy mid stream and that from now on they would look backwards at the day you ordered online or swiped a card and if at the end of the day you were technically over what you had in there, even though they e-mail you a positive balance and show a positive balance for that day and you actually have a positive balance because the vendor did not present the charge to your account for several days or a week. Well they are going to look backward and act as if your acount was charged back then. And you guessed it!! Use it as an excuse to extort your money. Well all my years may mean nothing to them, as i may be a small fish in the sea. But i do not see myself as a stupid fish. I am not hanging around to get mugged again. That is deceptive thievery and I will not stay within their crooked grasp. I hear good things about a Credit Union in the area. And I have Chase Bank whom I also have other personal accounts, including my Business account with. I am going to switch my Mortgage over to them as well when I leave the bank. I had a small line of credit with Bank of America. I paid that of the very next week. What really chaps my hide is I am not rich, but I had more than enough money to cover the shortages, I was paying attention, and I used the only data I could use to gauge my balance. The e-mails and the online account balance as they presented it to me each day. Had they told me I needed more it would have been there. So one more little fish leaves them and goes on an internet crusade to inform the world of their low tactics. Everyone i work with at a college her in Arizona has been told. Many are aghast at the deal, and I am proud to say some of them are pulling out with me. I will cut and paste this very letter into a word document, so I may spread the truth of this borderline, possibly illegal practice far and wide easily. I would hope others who are slow typist will do the same. It really makes letting folks know a breeze if you can just copy and past it right back into other forums and e-mails to friends, relatives and co-workers. You will notice that even though I already have some established accounts at Chase I do not at this time plan to have my automatic deposits made there. As after this I am a little leary of all banks. I don’t wish to bad mouth Chase at this time because I have not been using my checking account there for any active online banking. I would really like to know if anyone knows if Chase is sleazy as well. Not secondhand innuendo but actual personal experience. For now just to be safe our group at work is researching the different Credit Unions in town. We are the computer team at the college and we are always researching other products and services for the college. So we are all thinking, what the heck, now that we know what to look for, it should be a snap for our team. Maybe we will get lucky and BofA will be the next bank to fall. You cant keep sticking it to good customers forever and expect to succeed in any business.
November 10th, 2008 at 8:58 pm
I’ve been looking into overdraft charges that Wells Fargo deducted from my daughters account. What I have found out is really scaring me. The big banks are preying on people and arranging transactions to create a snowball effect of overdraft fees. If you don’t believe me check out some of the class actions lawsuits that are starting. There was an article in AARP because the banks are preying the elderly as well. This practice is bad for the economy and I hope something will be done.
November 19th, 2008 at 6:59 pm
This reminds me when I had Washington Mutual, I swear it was like being at a casino when I deposited my check then checked the balance later on. Even though I kept at trying to keep track of every purchase and withdrawal, my balance was never the amount I worked out on my own, the little fees kept showing up even though I would call and they would eventually after some harrowing debates take off my account. It really is scary the way these banks work now, if I had paid less attention, as most people with limited funds are likely to do since they dont have so much time and are busy with work, then WaMu would have stolen quite a bit of money from me after a an extended period with their little fees here and there but since I did pay attention and called them on it I was able to get most but not all the money returned to me. I switched to Commerce Bank and I have to say they were great, my balance was always the amount I had figured and never off by so much as a cent BUT this was five years ago as I moved out of the country for a few years and when I returned I just have been leery about banks so luckily with my current employer we are allowed to cash our checks with his bank for free so I have no use for an account currently, I just pay my bills online through a credit card then give money to a good friend who writes out a check to pay that off cleanly every month, but I know I wont be able to do this forever so I am going to try going back to Commerce Bank and hopefully they have not changed the way they do business and is still reasonably honest as I am sure all banks try to get away with as much possible but some just take it a bit too far! I remember Commerce was pretty convenient with the late hours they are opened and your ATM card is not mailed but given to you instantly right at the opening of your account and if you lose it they also give you another one right there at the bank instead of waiting for it to be mailed to you. I cant say they still do this but I will find out when I go and open an account with them.