Wells Fargo Ordered to Pay $203M in Overdraft Fees Class Action Settlement


San Francisco, CA: US District Judge William Alsup has issued an order to reinstate a $203 million judgment against Wells Fargo Bank. The judgment is based upon the court's findings, as affirmed on appeal by the Ninth Circuit, that Wells Fargo violated California's unfair competition law by deceiving its customers that debit card purchases would be posted chronologically to their accounts when in fact Wells Fargo posted them in a high-to-low order for the sole purpose of generating overdraft fees.

The case before Judge Alsup was brought on behalf of California Wells Fargo customers who, from November 15, 2004 to June 30, 2008, incurred overdraft fees on debit card transactions as a result of the bank's practice of sequencing transactions from highest to lowest.

On August 10, 2010, Judge Alsup issued a 90-page opinion finding that Wells Fargo manipulated its processing of customer debit card purchases by its California customers, and made misleading statements to consumers regarding is resequencing practice, to maximize overdraft fees in violation of California's Unfair Competition Law. This practice had the greatest impact on the bank's low income customers because their accounts often had the smallest balances.

As noted above, instead of posting transaction chronologically, Wells Fargo deducted the largest charges first, drawing down available balances more rapidly and triggering a higher volume of overdraft fees. Judge Alsup ordered that Wells Fargo return to its customers approximately $203 million in restitution and enjoined the abusive accounting practices. Judge Alsup's August 10, 2010, decision followed two and half years of extended litigation that culminated in a two-week bench trial which ended in May 2010.

On September 9, 2010, Wells Fargo filed an appeal with the Ninth Circuit Court of Appeals. On December 26, 2012, the appellate court issued an opinion upholding and reversing portions of Judge Alsup's order, and remanded the case to the district court for further proceedings.

The appellate court found the National Bank Act preempted application of state law to Wells Fargo's decision to use high-to-low posting. Importantly, the appellate court also found that false and misleading statements by Wells Fargo were not preempted and the bank could be held liable for affirmative misrepresentations in violation of California's Unfair Competition Law.

In his decision, Judge Alsup reinstated the judgment against Wells Fargo, finding: "This order is not penalizing Wells Fargo for a practice protected by federal preemption. Instead, it is penalizing Wells Fargo for affirmatively misleading the class as to what the practice was, namely engaging in a practice likely to mislead the class to believe that processing would be done in chronological order when, in fact, processing was done in high-to-low, non-chronological order."

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Reader Comments

Posted by
Doris Wright
on
I was a Wells Fargo Banking Customer from 2006-2010 and was never notified of this lawsuit, nor did I receive a check. Was there a certain year that you had to be a customer in order to be apart of this lawsuit?

Posted by
Michael Terry
on
If you feel you have been cheated at least $200 by your bank or credit union, write a letter and include evidence and send it to: U.S. Treasury, Comptroller of the Currency---Google for the rest of the address.

Posted by
Rebecca Ray
on
Hi,
I believe I should be a oart of this law suit.
How do I pursuit it?

Posted by
Lesley Gomez
on
I have been a customer of Wells Fargo since 2008. Why was I not notified of this. Are all Wells Fargo customers who have been with them on or before 2008 included? Also Wells Fargo has continued to reorganize purchases using different excuses up to and including last month. They always reorganize and hit the small amounts with overdrafts 3 or 4 even though the small items were charged first and the large amount last. When forced to give up time stamp on the actual charges they change their story. They have their employees well trained. Most of them you can get a few to slip up in the story but then a supervisor gets on, apologizes for the miss information and gives you the story that is in their best interest. It's amazing

Posted by
Al
on
Is not only WF it's every Bank and credit union. They use the same tactics and manipulate deposits and withdrawals at will and overdraft fees pile up. I was recently charged $25.00 each for two deposits (0.33 and another for $0.49) made on my account not honored by my CU because they claim I had defaulted on my LOC and my money in the account could not be used for deposits or withdrawals. It's mind boggling on how they can away with this!

Posted by
Nichol
on
About time they are always doing this to me

Posted by
Tina Dreis
on
I can relate to everyone above and this situation. Not only have I tried our local bank and the 1-800 number of Wells Fargo both being met with hostility and rudeness and to the point of them calling me a deadbeat. I am wondering if anybody who reads this knows of any ongoing class action suit regarding their overuse of fees and manipulation of accounts. This is published in February 2016 thank you very much for any help you can offer.

Posted by
John Ferguson
on
We've had numerous overdraft fees.

Posted by
Gail
on
About time! They did this to me repeatedly, in TEXAS and also , after refunding a disputed withdrawal, finding in my favor, they waited until I wrote checks against the refund THEY GAVE ME BASED ON MY CLAIM, THEN SUDDENLY, WITH NO NOTICE, WITHDREW IT AGAIN, CAUSING MY ACCOUNT TO BE OVERDRAWN AND THEN CHARGED A TON OF FEES FOR THAT!! WHEN I ASKED WHY, THEY SAID THEY CHANGED THEIR MINDS ABOUT THE CLAIM THEY APPROVED. TOTAL DELIBERATE CRAP! I COULD HAVE PAID IT OFF (197 $$ TOTAL) A HUNDRED TIMES BY NOW, BUT REFUS3D TO ON PRINCIPAL. I WILL NEVER USE THAT CROOKED BANK AGAIN! THE ORDER I WROTE CH3CKS NEVER OVERDRAFTED ME, BECAUSE I ALWAYS PUT IN ENOUGH TO COVER THINGS, BUT THEY TOOK HIGHEST AMOUNT FIRST AND DEPOSITS ADDED LAST, SO I WAS OVERDRAWN QUITE A FEW TIMES...ALL IN TEXAS, BACK IN 2001 TO 2002. STILL ANGRY OVER THAT CRAP!

Posted by
Heather
on
Wells Fargo charged me close to $2000.00 in overdraft fees

Posted by
Virginia
on
Manipulating processing of my debit card purchases, as they did in the California lawsuit. Drawing down available balances rapidly, triggering high volumes of overdraft fees, creating more overdraft fees by generating them against a low balance.

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