Wells Fargo manipulated overdraft fees – Judge Declares Pay Back of $200,000,000

Posted: August 11, 2010 in Finance
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By Aaron Smith, CNNMoney.com staff writerAugust 11, 2010: 10:29 AM ET

NEW YORK (CNNMoney.com) — Wells Fargo was ordered to pay more than $200 million in restitution to California customers for manipulating and multiplying overdraft fees, a federal judge has ruled.

U.S. District Court Judge William Alsup of Northern California, in his 90-page ruling Tuesday, said Wells Fargo used “a bookkeeping device” that turned one instance of overdrawing an account into as many as 10, allowing the bank to multiply the number of fees it could collect from a single mistake.

“The bank went to considerable effort to hide these manipulations while constructing a facade of phony disclosure,” he said.

The ruling said Wells Fargo (WFC, Fortune 500) must pay $203 million in restitution to California customers for its liberal use of $35 overdraft fees. This is a fraction of the $1.8 billion in overdraft fees that the bank collected in California from 2005 to 2007, according to the court.

“The revenue generated from these fees has been massive,” wrote the judge.

The ruling concluded a two-week bench trial that ended May 7.

Wells Fargo spokeswoman Richele Messick said that her company was “disappointed” with the judge’s ruling.

“We don’t believe it’s in line with the facts of the case and we plan to appeal,” she said.

Paul Miller, analyst for FBR Capital Markets, said that Wells Fargo’s handling of the overdraft fees was “always a questionable practice” that has been “going on for years.”

But he said that in the future, bank fees are going to become “more up front than back door,” especially in the wake of financial reform.

“I think with financial reform in general, a lot of these practices are going to change anyway,” he said. “The government is going to take a really hard look at this stuff.” To top of page

via California judge: Wells Fargo manipulated overdraft fees – Aug. 11, 2010.

IllegalInAmerica Says:

WOW!  I’m a Wells Fargo customer!  I wonder if I will eventually see any of the thousands of overdraft fees given back to me by this hellhole of a bank.  I normally wouldn’t have posted this, but feel, at some level, that this is a civil rights issue in the face of financial reform.  We are being owned by these people, creating electronic systems that know to automatically suck your bank account dry.. what the hell is this?  I would rather have Big Brother than my god darn bank account sucked dry like a customers wallet that is watching Twilight in theatres…

Good for the judge who has us in mind… and thank you.

IIA

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Comments
  1. Heather says:

    OOO! I hope they pay me back too!! They make it impossible for someone to get on their feet after having $6 in their account for a month. They’ll process transaction in a specific order just so they can get even more money. It’s sickening…

  2. Diane Shaw says:

    I just caught Wells Fargo with their hands in my cookie jar again! This time they immediately reversed the charges and I was not even transferred to a supervisor. I signed up for Wells Fargo Daily Business Account Update which is emailed to me daily showing my correct balance and any transactions that occurred that day which Wells Fargo certifies to be accurate with a date and time stamp.

    Wells Fargo has hit me with many $35 overdraft fees for their scam of back-dating postings in the past, but I could never prove it before. Wells Fargo has stolen literally thousands of dollars from my account using several scams of posting highest to lowest charges, back-dating, etc.- thousands AFTER reversing about a third of the overdraft charges they unfairly stole over the past three years.

    After legislation passed and I opted out of their overdraft “protection”, I have not had a single overdraft until last week- when I was hit again with two of these “back-dated” postings. I am hated by Wells Fargo supervisors whom have told me in no uncertain terms that they would NEVER AGAIN reverse another overdraft charge for me and have encouraged me to change banks. Yet, this time I had proof from their very system, and they immediately confirmed I had dated and stamped email proof that they could not deny and said nothing this time about their “courtesy” adjustments of their out-right stealing of my money. Insurance companies have been caught with computer systems that calculate opportunities to scam patients and their providers. i.e. Ingenix computer software used by United Healthcare….I’m sure Wells Fargo has their computer systems set up to reap in millions of dollars in rip-off charges. There are class action lawsuits against every major insurance company in the nation ( Being in the medical industry, I have been ripped off by every one of them). But back to overdraft fees….. Banks in England were forced to return overdraft fees from the previous ten years to customers that they stole from with overdraft protection when their courts corrected the injustice overseas. What we need is a good class action lawsuit against Wells Fargo to force them to return the monies they blatantly stole from their customers.

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