A San Francisco judge said on Tuesday that Wells Fargo’s practice regarding overdraft fees charged to customers was unfair, deceptive and fraudulent and ruled that the bank should pay about $203 million to customers.
bloomberg.com: U.S. District Judge William Alsup in San Francisco sided with three customers who sued in 2007 on behalf of thousands of Californians charged overdraft fees. In a ruling yesterday, he agreed that the practice was unfair, deceptive and fraudulent.
In 2001, Wells Fargo, the largest U.S. home lender, changed the way it treated daily debit transactions and cash withdrawals so that transactions with the highest dollar amount posted first, rather than in the order they occurred, according to the complaint. The practice, allegedly intended to boost revenue from overdraft fees, led to customers overdrawing accounts by small amounts multiple times a day, according to the complaint.
Customers don’t “reasonably expect that they will have to pay up to 10 overdraft fees when only one would ordinarily be incurred,” Alsup wrote, deciding the case without a jury. The multiple fees are “so pernicious,” he said, that they should be allowed only if customers expected them and in this case “the proof is the opposite.”
Wells Fargo “went to great lengths to bury the words deep in a lengthy fine-print document and the words selected were too vague to warn depositors, as even the bank’s own expert conceded,” Alsup wrote.
