The recent $203 million Wells Fargo overdraft lawsuit payout highlights the problem with big banks’ unfair practices and is a clear example of how you can take legal action against them. These big banks don’t have the right to charge overdraft fees, and they must pay you back to protect their reputation. Here are three reasons why you should consider a lawsuit:
Wells Fargo’s misrepresentations about eligibility for overdraft protection
Despite state laws protecting consumers from overdraft fees, Wells Fargo continues to deny overdraft-protection claimants. For example, a bank can’t force a customer to accept a lower overdraft protection lawsuit payout if it violates state laws. But it’s possible that a bank can misrepresent its eligibility for overdraft protection lawsuit payouts.
One of the most recent lawsuits challenges Wells Fargo’s misrepresentation about eligibility for overdraft protection payments. In this case, the company made it difficult for consumers to understand how to claim overdraft protection compensation because it misrepresented their eligibility. The bank defined the available balance as the amount of money available for the next transaction. In reality, this means that it could allow customers to overdraw their accounts more than they had available funds. That practice led to colossal amounts of overdraft fees.
The court’s ruling in the Wells Fargo case came from a two-week bench trial. The trial began on April 26, 2010, and concluded on May 7, 2010. Both sides presented extensive proposed findings of fact and conclusions of law and filed responses. Then, the bank was denied a motion for partial judgment and allowed to reargue points in its proposed findings of fact. On July 9, 2010, the judge accepted the settlement agreement and ruled in favor of the plaintiffs.
Misrepresentation of posting order
Plaintiffs who have filed overdraft lawsuits against Wells Fargo are seeking damages for misrepresenting the order in which debit card transactions are posted. In the past, the bank posted debit card transactions in the order of highest to lowest dollar amount, but plaintiffs argued that this practice was misleading because it resulted in increased overdraft fees. In the new Wells Fargo overdraft lawsuit, however, the court has reversed this decision, holding that the bank acted in bad faith when it posted debit card transactions in high-to-low order.
In the original lawsuit, the posting order was inversed, which means that a customer who has a large balance has to wait several days before the next debit transaction is posted. The court held that Wells Fargo’s practice was unfair, and it permanently barred the company from using the high-to-low posting order. It required the bank to use the chronological posting order, and all disclosures must conform to this new posting system.
Misrepresentation of overdraft fees
In one recent case, customers of the banking giant successfully sued Wells Fargo for misrepresenting overdraft fees. Wells Fargo used a resequencing scheme that resulted in high-to-low postings for the accounts in question. This practice was standardized and applied to all deposit accounts in both New Mexico and Washington. The lawsuit, titled Gutierrez v. Wells Fargo, successfully addressed individual issues as well as the effect on hundreds of thousands of depositors.
In another case, a bank was ordered to pay $203 million in penalties and attorney fees to consumers. The bank admitted that it systematically reordered debit charges from highest to lowest, and charged consumers as many as two or three overdraft fees. The court ruled that Wells Fargo violated California law by failing to disclose the true costs of overdraft fees.
Violation of arbitration clause
A violation of the arbitration clause in a Wells Fargo overdraft lawsuit payout may have prevented disclosure of the bank’s practices and could have hindered your ability to win a lawsuit against them. The arbitration clause may also have prevented you from disclosing the company’s cross-selling practices or fake accounts, which could have alerted other Wells Fargo customers.
Despite these concerns, Wells Fargo continues to fight back against consumers. The bank has consistently refused to settle overdraft lawsuits and is preparing to take this case to the 11th Circuit Court of Appeals. If the court finds that there is merit to the claim, the bank may go all the way to the Supreme Court to pursue a case. This would represent a win for consumers who were wrongfully charged with overdraft fees.
A violation of the arbitration clause in a Wells Fargo overdraft lawsuit payout may lead to a settlement that benefits both parties. Many banks have an arbitration clause in their customer contracts, but they do not want to settle disputes through the courts. In addition to the arbitrator’s fees and costs, the bank also has a policy of denying compensation to customers who are unable to prove that the bank knowingly violated the arbitration clause.