Judge orders Wells Fargo to pay customers $203-million for 'unfair' overdraft fees

Bank to appeal ruling that says practice cost California consumers 'huge amounts of money'

A spokeswoman for Wells Fargo Bank said Wednesday the institution will appeal a ruling by a federal judge in San Francisco requiring it to pay California customers $203 million for unfair overdraft fees.

U.S. District Judge William Alsup said in a 90-page ruling Tuesday that the bank manipulated the way it processes overdraft fees in an "unfair and deceptive way" for the purpose of maximizing fees.

Richele Messick, a spokeswoman for San Francisco-based Wells Fargo, said, "We are disappointed with the judge's ruling.

"We don't believe the ruling is in line with the facts and we plan to appeal," Messick said.

Alsup ruled in a class-action lawsuit filed in 2007 on behalf of the bank's California customers.

Richard Heimann, a lawyer for the customers, said, "These unfair practices cost California consumers huge amounts of money, and we are pleased that the court has ordered Wells Fargo to return $203 million of its ill-gotten gains to its customers."

Heimann called the decision "a symbolic victory for consumers throughout the country who are subjected to these kinds of oppressive business practices."

Alsup, who held a two-week nonjury trial on the lawsuit in February, said Wells Fargo engineered its posting of a customer's debit card purchases each night so that the largest purchase is always counted first. Many banks use the opposite system, posting the smallest items first, the judge said.

Wells Fargo's system meant that a customer could have multiple overdrafts, perhaps as many as 10 per day, instead of just one overdraft for the largest item, Alsup said. The judge also said the bank was deceptive about the practice.

"The bank went to considerable effort to hide these manipulations while constructing a facade of phony disclosure," he wrote.

Wells Fargo's current overdraft fee is $35. Alsup wrote that the bank - the nation's fourth largest in terms of assets - took in more than $1.4 billion in overdraft penalties in California between 2005 and 2007.


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Posted by Lahommed
a resident of Dublin
on Aug 13, 2010 at 10:59 am

Lahommed is a registered user.

It is obvious that even as the Gov't bailed out Wall street and the Auto industry...the Same old practices of greed are still alive and well! GM earning a billion in a quarter...Wells Fargo over charging overdraft fees...Bonuses on Wall street still hitting all time highs? The industries that were once the backbone of America have become the nightmare of America. Wells Fargo once put the customer first...but that is no longer the case....It is profit driven at all cost....and from the CEO down to the newest employee with Wells Fargo has no desire to change that idealology! If Wells Fargo should falter in the will be best to let them go under like we should have done with the auto industry and wall street! We have gained nothing by bailing them out...but they sure are racking up the booty from the bailouts!

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Posted by nadia joseph
a resident of another community
on Aug 15, 2010 at 9:05 pm

In my opinion Wells Fargo took money from more people than the ones in California they also stole money from people in Houston Texas, the amount of overdraft fees they charge. They have on every corner in Houston an office, they are ripping people off there should to be a law suit in Texas also.

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Posted by Great Example
a resident of Downtown
on Aug 15, 2010 at 9:34 pm

Another example of the rich getting richer and taking advantage of the system.

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