How Bank of America Overdraft Fees Scam Customers for Billions
Bank of America rearranges customer transactions while pending from largest to smallest, in order to create the most possible overdraft fees. They are robbing America blind. The example below shows have 1 common error can cause 6 overdraft fees.
It’s alarming how few people know about these predatory practices and how many customers side with the bank when hearing overdraft horror stories online. Many stating the customer was irresponsible and needs to watch his available balance closer etc. This exact situation has made Bank of America billions of dollars, yet they need taxpayer money to move forward?
Please forward this link and let’s call them out nationally.
Im positive you will have a large response as many people are upset.
The following is a sample scenario. The dates, times, transactions and amounts that are not to a specific account, but gives a valid example tof how this scam works based on watching the buying/posting trends of 12 individual Bank of America checking accounts over the last quarter of 2008. Thanks for reading. If something doesnt seem right or add up, please contact us. Bank of America Demo Account
Starting Account balance: $100.00
$100.00 was deposited as cash and is clear of any holds. The account currently has zero pending transactions.
On Wednesday, March 3rd, the customer makes five common transactions via his debit card with $100.00 available to use without overdrafting his/her account.
1. 7:30 AM: Purchased coffee for $4.79 2. 2:00 PM: Purchased lunch for $12.87 3. 5 PM: Purchased groceries for $38.43 4. 6 PM: Purchased gasoline for $20.00 5. 9 PM: Purchased movie tickets for $15.00
The total of these 5 transactions on Wednesday totals: $91.09. The customer clearly did not overdraft this account on Wednesday and should have a remaining balance of $8.91, with 5 pending transactions.
The customer forgets that on the 4th of every month his bank account is automatically debited $120 for his car insurance payment via the merchant, not online bill pay.
Thursday morning a new pending debit for $120 shows up via the merchant, while the 5 transactions are still in pending from the previous day. The bank would now deduct the largest pending transactions first, in this case the insurance payment of $120. Since the customer only had $100 to begin, the insurance payment has overdrafted the account $20. This will trigger a $35 pending overdraft fee to the account later that same day, again before the insurance and remaining pending transactions are posted.
The customer now has a negative $211.90 available balance.
($91.09+$120+$35.00 pending overdraft fee) with all six of his transactions from Wednesday still pending, yet as already been “charged” for one overdraft fee by the end of Thursday even though nothing has officially posted to the account. If a merchant fails to collect on the debit purchase, or collects for less, the customer still gets charged for the account being negative due to pending charges that may or may not of be collected.
On Friday, all six pending transactions and the overdraft fee have posted. We know from the information above that the day, time, and order that the customer used his debit card and exactly where his mistake was made. The bank sees the transactions much differently. The following is how the items post to the customers account, causing many overdrafts for a single overdraft mistake.
•$100 Starting Balance minus $35 overdraft fee = $65.00 left in the account. The bank collects there money first, before any transactions which can cause even more overdrafts.
•$65 Balance minus $120 for car insurance = -$55.00, the account is now negative, this fee was charged yesterday and has already posted.
•-$55 minus $38.43 for groceries = -$93.43, another overdraft fee is triggered.
•-$93.43 minus $20 for gasoline = -$113.43, another overdraft fee is triggered.
•-$113.43 minus $15 for movie tickets = -$128.43, another overdraft fee triggered.
•-$128.43 minus $12.87 for lunch = -$141.30, another overdraft fee triggered.
•-$141.30 minus $4.79 for coffee= -$146.09, another overdraft fee triggered.
•-$146.35 minus $175.00 for 5 pending overdraft fees =
-$321.09 Final Account Balance.
The customer has now been charged as if he had a negative balance of $55.00 on Wednesday and made transactions, even though Thursday’s single car insurance payment is what overdrafts the account a day later. Including the insurance, 6 total transactions were made and 6 overdraft fees have been charged. In this example, like many, it’s convenient that Bank of America can only charge up to 5 overdraft fees per day. By charging the initial overdraft while the items are only pending Wednesday, the bank gets to claim all 5 on Thursday, though 6 transactions post. This system allows the bank to create the largest possibleprofit on each single overdraft. In the above example: 6 fees x $35/fee = $210 in overdraft fees for what the customer expects would be only a single $35 fee. With only one overdraft, the customers account would be ($8.91 - $120 = -$111.09 - $35 = -$146.09)
$321.09 minus $146.09 = $175.00 or 5 extra overdraft fees.
If the customers car insurance payment debited on Friday, or the 5 pending transactions posted on Thursday before the insurance was debited only a single fee would be charged. If the items were posted in the order of purchase or even by the end of the banking day, again only a single fee would be charged. The bank doesn’t know when any transaction is going to be charged you account, if they allow you to use funds and the following day a larger transaction is made, it is unethical and predatory to continue to charge overdraft fees for money they allowed to be used. On Wednesday, the bank has no clue that on Thursday the car insurance payment will be debited to the account, therefore any transactions made prior to this debit should be processed first and overdraft fees are acquired for any transactions made after the account is negative.
There is currently a class action lawsuit that must be signed up for by May 1st regarding this, except I dont think it’s smart to join. Bank of America has set 35 million aside to pay this settlement if need be, but each person is only entitled to $78 and loses their right to sue the bank over related issues in the future.
The bank wants as many people as possible to join this suit, because each customer who had an issue as shown above paid $200 or more in fees…by losing the right to sue over unfair charges, the bank is ensuring that they wont have to pay back all the customers fees in court. That’s millions Bank of America is “saving” by paying out $78 for taking away your rights.
* Bank of America can now charge customers 10 overdraft fees in a single day instead of 5 as stated above. $350 per day in overdrafts now. Wow.
If the aboves happened to you, leave us a comment below.
How Bank of America Overdraft Fees Scam Customers for Billions
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