Wells Fargo $203 Million Penalty in Overdraft Fee Case Reinstated

Wells Fargo (WFC) must pay customers $203 million for manipulating debit-card transactions to boost overdraft fees, a federal judge in San Francisco ruled, reinstating a 2010 damage award.

U.S. District Judge William Alsup said Wells Fargo's practice of deceiving customers by posting debit transactions with the highest dollar amount first, rather than posting transactions in the order they occurred, was proven at trial. The practice misled consumers, who overdrew their accounts multiple times a day as a result, plaintiff attorneys said in a 2007 class-action lawsuit. The bank ended the practice in 2011.

Alsup awarded customers $203 million at trial. While a federal appeals court threw out the award and ruled that the bank's conduct was a pricing decision authorized under federal law, it found that Wells Fargo was liable for fraud violations of California's unfair competition law and sent the case back to Alsup to determine damages.

"Because Wells Fargo misrepresented the posting order and overdraft charges to its customers, the appropriate form of restitution is to restore the unexpected charges to Wells Fargo's customers," Alsup said in a May 14 order. He also said customers were entitled to interest on the award as of Oct. 25, 2010, the original date of the judgment.

Richele Messick, a Wells Fargo spokeswoman, said the bank is disappointed with the judge's decision.

"We don't believe that the ruling is in line with the facts of this or the law and plan to appeal," she said.

The case is Gutierrez v. Wells Fargo, 07-5923, U.S. District Court, Northern District of California (San Francisco).