Tag: Overdraft fees

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Consumer Watchdog, Eliminating Fees, News

Banks Generate $30bn Of Abusive Overdraft Fees

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.


Banks generated $7.65 billion of overdraft revenue during the first three months of 2015, according to the Wall Street Journal. On an annualized basis, banks are poised to generate $30.6 billion in overdraft revenue this year. Despite the passage of Regulation E, multiple lawsuits and the threat of regulation from the Consumer Financial Protection Bureau (“CFPB”), fees have only reduced by 4% compared to 2014. Overdraft fees have historically accounted for an outsized percentage of checking account revenue at the largest banks in the country, and it looks like these fees will remain a meaningful contributor to revenue in the near future.

Are Overdraft Fees Predatory?

The average overdraft fee is about $30 per incident. In addition, many banks charge extended overdraft fees. At some banks, it can cost $70 to borrow $6 for six days as a result of the extended overdraft fee. Even worse, nearly 50% of banks in the country will re-order transactions to increase the number and amount of overdraft fees charged. Rather than debiting money from your checking account in the order that the debits occurred, banks often debit your account in the order that they wished the transactions would have occurred.

Because overdrafts are so expensive, the vast majority of people avoid them. In Europe, an overdraft line of credit is a cash management product that makes sense for everyone. Keeping too much cash is expensive, because it could be better invested or placed into a long-term certificate of deposit. People of all economic backgrounds take advantage of generous overdraft lines of credit, which charge very low interest rates. Borrowing $6 for six days would only cost a few pennies in most large European banks.

However, American banks have made going overdraft a sin and high overdraft fees the punishment. As a result, people with money have completely avoided overdrafts. Only a small percentage of the population uses the overdraft product. 8% of bank customers generate 75% of overdraft fees. Overdrafts have become a short-term borrowing mechanism for people who have no other option. And overdrafts offered by banks are often more expensive than payday lenders. The typical payday lender charges $15 to borrow $100 for 2 weeks. As I mentioned in the Bank of America example, large banks are charging much more than that.

A banking practice is considered predatory when it meets a few definitions:

  • It targets people with low income or limited financial means
  • It charges a price that is dramatically higher than the cost of providing the service
  • It has opaque and complicated pricing that makes it difficult to understand the true cost of the product
  • It charges the fee when someone is in a vulnerable position and has few alternatives

Overdraft fees meet all of those requirements. The price of an overdraft is dramatically higher than the cost of providing the service. Banks charge an average of $30 to decline a transaction, which costs the bank close to nothing. When banks approve a transaction, credit risk is taken. However, the banks are charging effective interest rates above 400% in the form of fees. The banks are addicted to the revenue, which is why the revenue remains despite the backlash.

As overdrafts become more expensive, fewer people will use the service. Banks will extract more revenue from people who have fewer funds and a lower net worth. In my opinion, overdrafts are predatory and action is required.

Isn’t The Situation Improving?

Most headlines have reported the reduction in overdraft fees. And a 4% reduction is material. This reduction has come from banks eliminating high-to-low transaction ordering and putting limits on the number of overdraft fees that can be charged per day. At many banks, it used to be unlimited.

However, banks have not reduced the headline rate. Bank of America has been bragging about its commitment to the customer. But lets look at what they have really done:

  • The overdraft fee remains $35 per incident, and 4 incidents can happen each day
  • The extended overdraft fee remains in effect, charging $35 after 5 days
  • The bank eliminated the option to opt in to debit card and ATM overdraft fees. However, very few people are opting in to this service

In short, the changes have been cosmetic. And without rules from the CFPB or competitive pressure, I doubt the policy will change. The poorest Americans will continue to find Bank of America more expensive than most payday lenders.

What Alternatives Exist

I personally do not like doing business with institutions that create intricate webs of “gotcha” fees. That is why I switched to Ally Bank, which has virtually eliminated overdraft fees from its product offering. Most internet banks have done the same thing, and you can compare accounts here.

Unfortunately, if you need a branch, most branch-based banks remain expensive. And most credit unions are not far behind, charging $25 when the big banks are charging $30. Community banks, credit unions and large banks are all getting fat from these fees. Despite the regulatory pressure, lawsuits and negative press, our nation’s poorest will give banks another $30 billion of overdraft fees this year.

Nick Clements
Nick Clements |

Nick Clements is a writer at MagnifyMoney. You can email Nick at nick@magnifymoney.com

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Big Changes at Ally Bank

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Big management changes at Ally Bank continue, with Barbara Yastine, CEO of the Retail Bank, resigning. Yastine left Ally only a few months after the appointment of Jeff Brown as Chief Executive of the Group. The former CEO, Michael Carpenter, left the firm in February and had long ties with Yastine, dating back to their days at Citigroup. When Ally went public in March 2014, it opened at $27.91. It has not been a smooth ride for shareholders, and the stock closed at $21.03 on Friday, down 25% since the IPO. In its first tumultuous year as a public company, Ally has lost its exclusive leasing contract with General Motors, its CEO and now the head of its Retail Bank.

Ally has demonstrated strong profitability, generating $1.2 billion of profit in 2014 and a Return on Equity of 7.9%. The business had managed to drive down funding costs via a hugely successful online bank, which was led by Yastine. In addition, Ally had worked through the credit losses of the inherited General Motors portfolio and was heading towards double-digit returns. The big question on shareholder and customer minds: where will Ally go next?

The Opposite of The Big Banks

Its name said it all: Ally Bank wanted to be very different from traditional banks. Ally was born during the financial crisis, when General Motors was rescued and the financing business (GMAC) was separated from the auto business. The Treasury invested billions in GMAC, and had majority ownership. In 2010, the business was renamed Ally. The mission of the business reflected the mood at the time: no one trusted banks, particularly auto lending businesses targeting subprime auto financing.

What made Ally unique was that it didn’t just brand itself allies of the consumer, it actually meant it. Its savings accounts had market leading interest rates, paying close to 1%. Not only were the rates high, but there were no minimum deposits, no minimum balances, no fees and an incredibly easy account opening process. In checking accounts, Ally differentiated itself even further. Ally introduced a truly free checking account, with no monthly fee and no sneaky minimum balance or direct deposit requirements. It changed the game with its approach to ATM fees. Ally offers unlimited reimbursement of other bank ATM fees. And it really staked its claim on overdraft fees. If you link your savings account, Ally Bank will transfer funds between the savings and checking account for free, compared to the standard $10 charge levied by traditional banks. And, rather than $35 per incident, up to $140 day of NSF (non-sufficient funds) and overdraft fees, Ally capped its fees to $9 per day. Ally didn’t decide to be marginally better than the rest of the industry. Instead, it completely rewrote the rulebook.

Its checking account received an A+ Transparency Score from MagnifyMoney. An honor only two banks in the country received.

You can almost imagine a team of former bankers (which they were) making a list of the worst sins and fees, and then reversing them. Ally was refreshing, and refreshingly profitable.

To fund the generous consumer accounts, Ally did not build a branch network. It built a truly digital bank, without the overhead of its competitors. And, more importantly, it viewed its deposit accounts as enablers of its lending business, rather than as a profit-center. If you read Ally’s investor presentation, you will the bank described as a “deposit franchise.” The key metric is the cost of deposits, rather than the fee income earned from those accounts. By managing the business in this way, Ally was able to focus on deposit growth and customer satisfaction, rather than extracting an extra nickel from its depositors.

But Ally also had history on its side. The deposit franchise was a cheaper way to fund subprime auto loans than the debt market. So, the faster the deposit franchise grew, the lower the overall group funding costs. This would give positive year-over-year earnings momentum.

Ally has now reached an inflection point. Future asset growth is in question, after the loss of General Motors. With an increasingly competitive online deposit market, Ally risks becoming a victim of its own success, and online deposits may start to look comparatively more expensive.

Back To The Future?

The new CEO spent his formative years at Bank of America. The question, for shareholders and customers, is whether or not he will continue living up to the Ally brand. Ally could use its brand and low-cost funding to transform other parts of the banking sector. Credit cards, personal loans and student loan refinancing are just three asset classes that could welcome Ally’s touch.

However, a quicker and easier way to increase revenue would be to increase the fees on its existing account holders. Ally could also lower the interest rate on savings accounts, as Capital One did to ING customers after the acquisition.

At MagnifyMoney, we are big fans of the Ally retail bank built by Barbara Yastine. We hope that Ally’s next step is to revolutionize other asset classes and product types, rather than reverting to type and increasing fees and reducing rates. Only time will tell.



Nick Clements
Nick Clements |

Nick Clements is a writer at MagnifyMoney. You can email Nick at nick@magnifymoney.com

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The OCC Acts Unilaterally Against Abusive Bank Overdrafts

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.


Earlier this month, the OCC (Office of the Comptroller of the Currency) quietly issued Bulletin 2015-13, which announced the publication of a revised handbook on deposit-related consumer credit. The OCC is getting tough on bank overdrafts, which have come under increasing scrutiny for being predatory. At MagnifyMoney, we have long called overdrafts one of the most expensive forms of short-term borrowing in the world.

The last booklet was issued in March 1990, and was used by OCC examiners to assess a bank’s deposit-related consumer credit activities, including overdrafts. The new handbook has established standards which would dramatically change the overdraft products currently offered by banks in the country. If the banks actually follow the rules outlined by the OCC, we should expect a revolution in the way products are designed, priced and marketed. However, banks are very good at making minimal change in the face of new rules, particularly when significant revenue is at stake. Banks generated an estimated $32 billion in overdraft fees during 2013, so they will not give up this revenue stream easily.

Bank overdrafts are marketed by banks as a “protection” that can help a consumer if they are running short of cash, or if they make a mistake.  However, they are extremely expensive. If you do not have overdraft protection (a linked account), a bank will typically charge you $35 if they approve the transaction (an overdraft charge), or $35 if they decline the transaction (an NSF, or non-sufficient funds, fee). The fee is charged on a per incident basis, regardless of the actual transaction value. If the transaction is approved, the total amount of the overdraft (which includes the shortfall and fee) is due immediately. Many banks will charge an incremental extended overdraft fee if the account balance is not brought positive quickly. For example, it could cost $70 to borrow $6 for 6 days from Bank of America, based upon their overdraft fees and rules. In addition, even the method of posting transactions has caused controversy. Rather than posting transactions as they happen, nearly half of the banks in America re-order the transactions, posting the highest value transactions first, thereby increasing the number of times that an individual can trigger an overdraft charge.

Reg E did provide some additional consumer protection. It required banks to receive opt-in for overdrafts that are triggered by ATM cards (when withdrawing cash), and debit cards (when making purchases in a store). However, the regulation did nothing to protect all other forms of transactions, which includes checks, automatic payments, billpay and others.

Bank overdrafts in the United States raise every red flag imaginable. The incredibly arcane and complicated fee structures lack transparency and exist to extract maximum value from consumer mistakes or misfortune. The costs charged by the banks for what is effectively a line of credit are obscene when compared with the actual cost of providing those services. And, although banks like to point fingers at payday lenders and focus on their CRA activities on reducing the number of unbanked, many people have left the banking sector because overdrafts are more expensive than overdrafts.

The new handbook has some shocking new requirements, which we detail below:

  • Opt-in for all overdraft products: under Reg E, customers are only required to opt-in to overdraft protection for debit/ATM overdraft protection. However, the handbook requires proof of opt-in for all protection, dramatically expanding the scope
  • Banks will have to perform underwriting of customers before extending an overdraft product. The OCC explicitly requires an analysis of income and debt. which provides information for an affordability check.
  • Our favorite requirement focuses on “prudent limitations on product costs and usage.” Most importantly, the OCC states that “while permitting appropriate returns, fees should be reasonably correlated to the actual costs of offering, underwriting, and servicing the product as well as associated risks.” The OCC is particularly concerned about “repeated usage of high-cost, short-term loans for longer-term borrowing needs.”
  • Critically, the OCC requires that “banks should structure credit terms to reduce the principal balance of the loan over a reasonable period of time.” The worst form of short-term loan offers a customer a choice: pay off the entire balance today, or renew the product for another fee. This method, a favorite of the payday loan industry and copied by many deposit advance products, creates the perfect debt trap. Consumers are unable to pay off the full balance at once, yet banks do not offer an amortizing option. So, people just pay a fee and never get out of debt.
  • Finally, the OCC suggest that “banks should consider reporting payment information to credit bureaus.” Currently, the banks tend to report negative information, on a haphazard basis, to Chex Systems. Responsible customers are not able to benefit from on-time repayment. And an alternative credit reporting universe is created, with limited transparency.

Using common sense as our guide, these new rules make a lot of sense. Before lending someone money, make sure they can afford it. Don’t force people into the product: let them have a choice before you start charging them fees. Don’t rip them off with outrageous fees. And provide a repayment method that actually gives someone the chance of getting out of debt.

Overdrafts have become so out of control, that even these new rules will really shake up the overdraft market if banks actually follow the spirit of the requirement. However, I think banks will likely hire expensive law firms to build a robust defense. They will somehow prove that it actually costs $35 for an automated computer algorithm to approve a $6 loan. I just hope the OCC backs up these rules with strict enforcement. And we hope the CFPB builds on this and issues explicit rules that remove the predatory structure of these products.

Nick Clements
Nick Clements |

Nick Clements is a writer at MagnifyMoney. You can email Nick at nick@magnifymoney.com

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Citibank Forced to Rely Less on ChexSystems

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.


ChexSystems is a credit report for banking accounts. If you bounce a check or don’t pay an overdraft fee, you could have a derogatory mark on your ChexSystems file. Most people have never heard of the report until they end up on the negative list, which can make it impossible to open checking accounts anywhere else. Banks have almost complete discretion in how they report people’s behavior to the system. Many banks often refuse to let you open a bank account if you have just one bad mark. Chex reports are also known to have a high level of data inaccuracy.

The unbanked in America often find ChexSystems reports to be a huge barrier to lowering banking fees and escaping the fringes of the financial world, including payday lenders and money transfer services. Just one bad check could force you into the expensive world of check cashing providers for up to 7 years.

This week, the Attorney General of New York reached an agreement with Citibank. Although Citi is not being as progressive as Capital One (who no longer uses Chex for their checking accounts), it is making some big changes. Citibank will consult Chex for anti-fraud purposes, but the bank is altering its use of negative information going forward. Citi has promised that it will no longer refuse to open a bank account because of minor errors, like isolated examples of bounced checks or overdrafts.

Everyone should order their annual free copy of their Chex report, which you can learn to do here. We are pleased Citibank is eliminating its most egregious practice of banning someone from banking for years after just one mistake. We find the punishment for small overdraft infractions particularly hypocritical, given how much money banks like to make from overdraft fees.

However, we wish Citi would have gone further, and believe CapitalOne 360 still offers a better solution. Capital One is famous for its use of data, and our guess is that it understands the limited value of Chex Systems screening.

Keep up with the news and information about the best financial products by following us on Twitter @Magnify_Money and on Facebook.

Nick Clements
Nick Clements |

Nick Clements is a writer at MagnifyMoney. You can email Nick at nick@magnifymoney.com

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Bank Earnings Show Higher Rewards and Cheaper Loans

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.


Recent earnings announcements from Discover and Fifth Third show that we can expect the credit card rewards battle to keep heating up. And, thanks to the Consumer Financial Protection Bureau (CFPB), we can expect that short-term loans will finally start to get a little bit cheaper.

As we reported in our review of the Big 4 Banks (Citi, Chase, Wells Fargo and Bank of America) last week, savers and credit card borrowers at big banks should not expect any improvement in the deal that they are getting. The banks bragged about the continued reduction in the cost of deposits, and they maintained their high interest rates on credit cards. If you want a decent interest rate on your savings account, switch to an internet only savings account. The mega-banks continue to pay 0.01% on their basic savings accounts. And, if you need to borrow money, standard Purchase APRs remain high. Despite record low interest rates, banks are maintaining stable returns on their credit card businesses.

However, there were two pieces of good news from Discover and Fifth Third’s recent earnings announcements. They highlight two trends that we should expect in 2015: rewards on credit cards will get richer, and the cost of short term borrowing may finally start to reduce (thanks to the CFPB).

Rewards on Credit Cards

Banks make most of their money on credit cards when people cannot afford to pay off the statement balance in full. In bank language, they are called revolvers. When you do not pay the balance in full, you are charged interest. And the interest rates on credit cards are high. In a recent survey by MagnifyMoney, we found that 75% of people with credit card debt pay an interest rate higher than 15%.

In order to build balances on credit cards, the credit card companies increasingly offer rich reward schemes. The most lucrative rewards come from cash back credit cards or frequent flier miles. Banks will lure you with rich rewards, and then hope you spend more than you can afford.

Credit card companies are in aggressive growth mode. In 2014, credit card companies issued $319 billion of new credit lines, compared to $267 billion in 2013. And growth is expected to increase in 2015.

In order to stand out, the rewards are only going to get richer. Some banks will increase the value of the rewards they hand out, while others will make it easier to redeem by removing annoying terms, conditions and limitations.

Discover, the company that invented the concept of cash back, introduced last year a new redemption policy on the Discover it credit card. Historically, they would have a minimum redemption amount: there was a minimum $50 cash back redemption. So, if you only had $40 of cash back earned, you would have to spend $1,000 to earn another $10 of cash back before you could redeem. That has been changed, and there is now no minimum redemption threshold. That means people who spend less money can still get their cash back.

And, in the earnings announcement, we see that people have been redeeming. Discover took a charge of $178 million, which is the cost of higher redemptions. That shows that Discover actually did what it promised.

As competition continues to increase, we should expect to see higher reward costs from all credit card providers looking to attract new customers. If you pay your credit card balance in full, every month, you will be able to enjoy better rewards. However, if you can’t control your spending, you shouldn’t use reward credit cards because the rewards earned will be a lot less than the interest you pay.

Short Term Borrowing

As we have written previously, overdrafts are obscenely expensive ways to borrow. Big banks charge $35 per incident, and many banks pile extended overdraft fees on top. You could pay $70 to borrow $6 for 6 days.

The CFPB has promised action in 2015. Some banks will wait to see the new rules, and then do the bare minimum. However, other banks will likely try to be ahead of the curve.

One corner of the overdraft universe that has received a lot of attention is the deposit advance product. That is effectively payday lending, but completed by banks. If you have your money directly deposited into your bank, you can get an “advance” in exchange for a fee. The fee averaged $10 for every $100 borrowed. Given that people are typically paid every two weeks, that is the equivalent of $20 per month to borrow $100. These are shockingly high fees.

Even worse, these fees were charged by banks that had long-term relationships, data and the direct deposit coming directly from the customer’s employer. The banks did not need to charge fees at that level. They could make good money, and not obscene money.

Well, Fifth Third has decided to do just that. They reduced the fee to $3 per $100 advanced. They used to charge the industry average of $10. That is a 70% reduction. They expect to generate $100 million less revenue as a result of the change. But, they are still continuing with the business, which means it must still be profitable.

At MagnifyMoney, we believe that banks are uniquely positioned to kill the payday lending market. They have data, and in many cases they have the direct deposit relationship. Fifth Third Bank has made the bet that they can still make money by charging 70% less. That says a lot about what they used to charge, the power of the CFPB, and the potential for meaningful consumer savings.

We expect both of these trends to continue in 2015: higher rewards on credit cards and lower costs for short-term lending. The market is driving reward competition, and the regulator is driving lower costs on short-term borrowing.

Nick Clements
Nick Clements |

Nick Clements is a writer at MagnifyMoney. You can email Nick at nick@magnifymoney.com

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TD Bank Hit By a Class Action Lawsuit For Overdraft Fees

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.


Woman trying to protect her saving

TD Bank loves overdraft fees so much it’s willing to pay fines.

Courthouse News Service reports New York resident John Kashgarian has filed a class action lawsuit against TD Bank claiming egregious overdraft fees.

Specifically, he’s claiming the fees TD and other banks charged since 2010 are unreasonable and manipulative, and reordering of those fees to make accounts that are in otherwise good standing go overdraft is the biggest problem.

How bad are the fees?

TD’s ‘Simple Checking’ account fee schedule says you will be hit with a $35 fee for each item overdrawn, and will let up to 5 items be overdrawn each business day. That’s $175 in fees a day.

And TD will charge another $20 if your account is overdrawn for 10 business days or more.

It also encourages users to sign up for ‘TD Debit Card Advance,’ which is billed as a service that ‘may help you avoid debit card declines.’

But each time the service kicks in on a debit card transaction, you’re hit with a $35 overdraft fee.

Transaction Re-ordering

And worse, in a study last year by Moebs, TD Bank was the only of the top 10 banks to process transactions from high to low, rather than the order in which they are received.

For example, let’s say you have $1,400 in your account. A $1,500 rent check hits your account at the end of the day on Monday, while you charged a $5 cup of coffee in the morning and $10 for a sandwich on your debit card in the afternoon.

With TD, you would be hit for an overdraft fee not just for the rent check, but for the cup of coffee and lunch charge. That’e even though your account had sufficient funds when the coffee and lunch charges went through.

So instead of paying one $35 fee for the overdrawn rent check, you pay it three times, for $105 in fees.

Koshgarian says about this practice “In these instances, defendants manipulate and alters the timing of the customer’s transactions, in a manner inconsistent with Defendants’ contractual obligations, in order to maximize overdraft fees imposed on the customer. Thus, it is through manipulation and alteration of customers’ transaction records in a manner inconsistent with defendants’ contractual obligations that defendants maximizes overdraft fees imposed on customers.”

He’s going after fees charged since 2010.

That’s because TD Bank has already paid $62 million to settle another overdraft case for charges dated December 1, 2003 – August 15, 2010. TD customers who paid more than one fee in a day on an account where high to low ordering put transactions over the edge were automatically reimbursed as part of the settlement.

Yet despite that settlement and payout, TD continued to charge overdraft fees on a high low basis.

Bank of America, Chase, and others paid larger settlements of over $100 million, and no longer reorder transactions for the purposes of calculating overdraft fees.


Brian Karimzad
Brian Karimzad |

Brian Karimzad is a writer at MagnifyMoney. You can email Brian at brian@magnifymoney.com

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Fine Print Alert

Fine Print Alert: Overdraft Fees, Ebola Scams and Fake Love

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.


Well, hello there. You strike us as a person who wants to be in the know. May we suggest you also sign up for our Price Checker Newsletter. Twice a month, we’ll deliver the best-of-the-best in financial products right to your inbox.

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In our weekly Fine Print Alert we call out any good news from the financial community and shine a spotlight on any sneaky changes in the fine print. We also share our favorite reads from the week.


More than half of credit unions and banks still reordering transactions for troops … 

Pew Charitable Trusts recently released a report about banking practices being used by the financial institutions serving our military members.

One of the most bothersome stats hones in on overdraft fees. 44 percent of banks on military bases and 24 percent of credit unions on base disclose that they do not participate in transaction reordering. Transaction reordering is the practice of putting the highest charge first, which forces a person into overdraft earlier. This is highly profitable for a bank or credit union, especially those that charge more than one fee a day.

According to the report, this means three-quarters of credit unions and more than half of banks are participating in some sort of transaction reordering. This is highly predatory and targeting men and women who put their lives on the line to defend our country. It’s shameful and the banks and credit unions participating should be held accountable.

You can find the full report here and find ways to eliminate overdraft fees here.

In other overdraft news…

Wells Fargo lost its appeal to overturn a verdict requiring the bank to compensate customers $203 million for manipulating transaction posting in order to increase the amount of overdraft fees that they charged.

Transaction reordering is indeed legal. In fact, nearly 50 percent of banks still process transactions in this way (including many of the banks mentioned in the fine print alert above).

In 2001, Wells Fargo clearly made this change to increase revenue. And customers clearly did not understand it. (In fact, it is such a crazy way to post transactions that it takes a bit of time to explain.) The lawsuit is not about the legality of high-to-low processing (which is legal). It is about false and misleading statements that cost people a lot of money.

If you bank with Wells Fargo and believe you were wrongfully charged an overdraft fee due to transaction reordering, you may be eligible for compensation thanks to this decision. However, Wells Fargo may keep fighting this in court, so don’t expect a check anytime soon.

You can read more details and how to deal with transaction reordering here.

Student loan servicers engaging in illegal practices… 

Student loan servicers are supposed to help men and women handle their debt while facing a financial hardship or unemployment. According to a recent CFPB report, more than 40 million Americans depend on student loan servicers to be a primary point of contact about their various loans.

The CFPB discovered these services have been engaging in illegal practices resulting in fees and harassing debt call collections for their clients.

Some of these illegal practices include: allocating payments to maximize late fees, misrepresenting minimum payments, charging illegal late fees, failing to provide accurate tax information, misleading consumers about bankruptcy protection and making illegal debt collection calls to consumers at inconvenient times.

Read details of the report here.

Ebola scams are spreading….

Kiplinger’s Cameron Huddelston reports that both the Better Business Bureau and the Federal Trade Commission have alerted consumers to Ebola-related charity scams.

Cameron covers all the details in her article here.

AT&T actually limited “unlimited data”…

Stepping away from a financial heads up, we’re shining a spotlight on phone service provider AT&T, and not for a good reason.

The Federal Trade Commission is suing AT&T for limiting their so-called unlimited data.

AT&T offered unlimited data plans from 2007 to 2010. Once they got rid of the option, the company grandfathered in customers on the plan when their contracts were up for renewal. But AT&T started slowing down the data for these customers so their unlimited plans didn’t have the bandwidth to actually use the smartphone to its full potential.

This practice is also known as data throttling, and while not always illegal, it’s against the law when done in a deception or unfair manner.

Read more details here.

Who knew finding love on the Internet could be a scam…?

JDI Dating, an UK-based online dating service, scammed its users into thinking they’d found love, or at least someone to go on a date with.

The site would lure customers in with a free subscription, but require a paid membership in order to communicate with potential love interests. JDI would lure in people on the free membership by creating fake profiles have a date express interest by sending a “wink.” Once the customer upgraded to a paid membership, JDI made it difficult to leave. The company would fail to honor cancellation requests and continue to bill lovelorn former customers.

Read more details from the FTC here.





  • A father of eight explains why he hasn’t saved a penny for his kids’ college education – “David T. Fagan has eight kids and his oldest daughter is a senior in high school–and he hasn’t saved a penny for his children’s college education. But Fagan isn’t stressing. In fact, Fagan says he would prefer it if his children didn’t go to college at all.” – Jonnelle Marte of the Washington Post covers a man’s controversial decision.
  • When My Relationship Got Serious Enough for the Money Talk – “After all, money is one of the issues couples fight about the most, and it can get ugly if you’re not both on the same page. I know from experience. My partner and I don’t fight much anymore now that we’ve settled into our relationship. We know each other really well. We know what works for us, and we’ve already worked out most of the major issues that tripped us up early on. But when we started thinking about finances in terms of “ours” instead of “mine” and “yours,” things got messy.” Paula Pant of Afford Anything discusses ways to deal with the money talk on DailyFinance.
  • Some people have, “that kind of money”. You Don’t! – “As early as middle school, I remember looking at things my peers had, and wishing I had the same. I’d see the clothes, shoes and jewelry that other girls had and think to myself, “man it would be nice to have things like that.” – Kari of Student Debt Survivor dives into a touchy topic: dealing with what you can and can’t afford to have.
  • Pay Yourself First – Action Plan – “Despite taking the advice I was given, there are 3 (or 4) people getting paid out of my wages before I do [Income taxes, medicare taxes, social security, health care]. Since I would rather keep more of my money than let them have it, I’ve been trying to figure out ways to put my name ahead of all those other groups siphoning money from my check. If you’re interested in that as well, here’s what you can do.” – Jeff of Sustainable Life Blog analyzes how to actually pay yourself first (before taxes) on My Personal Finance Journey.


Erin Lowry
Erin Lowry |

Erin Lowry is a writer at MagnifyMoney. You can email Erin at erin@magnifymoney.com