Wells Fargo ordered to pay back $203M in fees

Wells Fargo & Co. was ordered by a federal judge in California to change what he called “unfair and deceptive business practices” that led customers... More Below... Posted by on Aug 13th, 2010 and filed under Finance, US.

Wells Fargo & Co. was ordered by a federal judge in California to change what he called “unfair and deceptive business practices” that led customers into paying multiple overdraft fees, and to pay $203 million back to customers.

US District Judge William Alsup, in a decision handed down late Tuesday, accused Wells Fargo of “profiteering” by changing its policies to process checks, debit card transactions, and bill payments from the highest dollar amount to the lowest, rather than in the order the transactions took place. That helped drain customer bank accounts faster and drive up overdraft fees, a policy Alsup referred to as “gouging and profiteering.”

Beginning in 2001, Wells Fargo adopted the policies and they became widespread across the banking industry. It is unclear how the ruling would apply to the rest of the industry.

The ruling detailed the experiences of two Wells Fargo customers who used their debit cards for multiple small purchases, and were then charged hundreds in overdraft fees because the order the purchases were cleared by the bank depended on the amounts. The customers who were part of a class action were not properly informed of the bank’s policies on processing payments and were unaware the bank would allow debit purchases to go through when their accounts were overdrawn, the judge found.

(Thanks to AP and Wikipedia)