St. Louis, KA: Commerce Bancshares, a Kansas City-based financial institution operating simply as Commerce Bank in the state of Missouri, is being sued by one of its clients who claims the company's bank overdraft fees violate state law.
The plaintiff, Harold J. Joseph Jr., has accused the banking chain of manipulating the sequence of debit card purchases in an attempt to maximize the number and size of overdraft fees that they can impose. The suit was filed in a Jackson County Circuit Court.
Overdraft fees are typically assessed for banking customers whose purchases are larger than the amount currently within their checking account - a service that comes with a variable fee depending on amount and frequency of use. The practice has come under scrutiny in recent years.
New regulations that will take effect by the end of the summer seek to rectify this problem by making overdraft protection an opt-in service and by regulating the terms of the action.
Excessive bank overdraft fees lawsuits have been filed and/or settled against a variety of banks, including Wells Fargo, Bank of America, M&T Bank and Wachovia. The lawsuits allege that banks charge excessive overdraft fees when customers' accounts go into overdraft. They further allege that the banks use a number of unethical practices to push their accounts into overdraft, such as misrepresenting customers' account balances and reordering debits and credits to accounts.