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Updated on Friday, October 31, 2014
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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.
FINE PRINT ALERT
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.
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.
MAGNIFYMONEY IN THE NEWS
- US News and World Report: Coming Next Fall: More Chip and PIN Cards in the U.S.
- American Banker: Banks, Taking Hint from Regulators, Overhaul Overdrafts
- Credit Union Times: PenFed Promise Card Beats Banks
- Washington Business Journal: PenFed gets A+ for rate, transparency on balance transfer card
FAVORITE READS FROM AROUND THE WEB
- 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.