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U.S. Bancorp is raising some of its overdraft fees to $35 per transaction, in the latest example of banks changing the ways that they charge checking account customers.
May 17 -
The Consumer Financial Protection Bureau's announcement Wednesday that it was targeting overdraft protection practices was a stark reminder for bankers that even if they have already made significant changes, it is likely not enough, observers warned.
February 22 -
On Tuesday, Wells Fargo took its shot at overturning a landmark 2010 district court judgment against its overdraft fees and practices.
May 16 -
TD Bank has agreed to settle a lawsuit over its processing of overdraft fees for $62 million, the bank and plaintiffs' attorneys stated in a court filing late Friday.
May 11
Word came out last week that U.S. Bank is
JPMorgan Chase was penalized $110 million, Citizens Bank $137 million, TD Bank $62 million, Whitney Bank $6 million, and Bancorp South $1.75 million.
One might think that these fines would discourage a bank from making its overdraft program more punishing to depositors – at least right now.
Interestingly, U.S. Bank made no mention of whether it is also reconsidering how it clears checks and other debits. This is of particular interest as courts have recognized that the practice of clearing items from highest value to lowest is designed to maximize the number and amount of fees that can be charged to a customer's account. The process magnifies the abusive nature of their overdraft programs. Inasmuch as most depositors have little way of knowing their banks' clearing processes, "high-to-low" clearing also adds a degree of deception to overdraft programs.
Although U.S. Bank's announcement is likely to draw the attention of the Consumer Financial Protection Bureau, the watchdog for unfair, deceptive and abusive acts and practices, the bank can certainly show that it is not being deceptive.
While being upfront about making fees more unfair and abusive is an improvement, it's hard to applaud the effort.
Jim Wells is president of Wellspring Consulting International, which focuses on expanding access to financial services for consumers who do not use traditional depository institutions.
