A question about excessive bank charges

[mmm]

I know someone who was charged 342 dollars in
penalties due to a sixteen dollar overdraft.
The bank refuses to close the account and the
obscene charges keep mounting.

Can the bank sue to collect these charges
(I know at one time they could not)?


Also, what is her best recourse, other than paying the
charges, which ain't gonna happen.

She is opening a checking account at a different bank
on Monday.
Thank You

[SCRUBDASHRUB]

1. Sounds like Wachovia (or as I used to call it when I banked with them

"Walk-All-Over-Ya." They sucked!!!

[mmm]

2. US Bank: They Really Suck

[BlondieK143]

3. If they've turned it over to collections

or depending on what actions they've taken so far that she doesn't know about, she could have a hard time opening an account at another bank. My suggestion to her is that she uses a band where her work's checks come from. The only con about this, however, is if she owes them money for a really long period of time (it varies from bank to bank) they have a right to take it automatically from her pay (or so I've been told).

I was in the same situation a few weeks ago with my bank. I had went to the beach about two months ago and because of a service charge on the bank's part, my account was charged $30 for being $0.60 short. Since I was at the beach (and had no use for my account for about 5 weeks) the charges kept building up until I had $190 on the account. They threatened to sue and blah blah. Basically, it was their mistake for the service charge but I still had to come up with the money (another bank wouldn't let me open an account because of the outstanding balance on my current one). Damn banks. Good luck to your friend though.

[ronnykmarshall]

6. They should haven't done that.

Granted (and don't flame me) you are at fault as far as not having enought money to cover your monthly service charge, they should have had reversed out some of NSF fees. Pisses me off when branch manager won't at least do that.

[BlondieK143]

7. The service charge wasn't my fault though.

They had already taken it out at the beginning of the month and weren't supposed to do it twice in one month. And when I told the manager this, he simply said there was nothing he could do, it was a computer glitch and it had been so long since it had happened, he couldn't take back the charges.

[ronnykmarshall]

10. That's crap then

There is no way in hell you should get a service charge twice a month. Some managers are chicken shits. They CAN reverse the damn charges. That's total bullshit. :grr:

[BlondieK143]

11. I know.

Why do you think my account is being closed? :D

It's bullshit but there's nothing I can do. I felt like they WOULD try to sue me so why not just pay the stupid fee and get it over with?

[SCRUBDASHRUB]

9. I would deposit my paycheck on a Friday, have plenty of money in my

account and somehow they would manage to still screw me with late charges. A friend of mine also banked w/ Walk All Over Ya and she swore they would hold her check just to make sure she got charged these late fees. She could be 30 cents over drawn and there's another $30. I closed my account and opened an account with a local credit union (husband worked for the state) that had free overdraft protection. Oh yeah; Wachovia charged you for that, too. My friend is a student at a state-supported school, so she did the same thing. Wachovia sucks ass!

[mmm]

8. that sucks

[happyslug]

4. Check with an Attorney in your state

Under general contract law (and having a bank account is a "Contract") if a party breeched a Contract the non-breaching party (in this case the bank) can recover for any harm it incurred because of the breach.

On the other hand the breaching party can not be subject to a penalty for the breach. I.e. you can not be forced to pay a fee in excess of any actual harm incurred by the non-breaching party.

Now there is one exception to this rule, it is called "Liquidated Damages". Liquidated Damages are fees agreed to in a contract to cover costs not readily determinable when the breach occurs, but approximates the costs incurred when a breach occurs.

The classic case is when a buyer of a home decided NOT to buy After the contract to sell has been signed. At that point the down payment (If 10% of less) is viewed as liquidated damages and the seller can keep the Down Payment (If more than 10% the courts have long ruled that high fee does NOT approximate any costs incurred by the Seller and is an illegal Penalty not Liquidated damages. This is why down payments NEVER exceed 10%.

In this case what are the approximate costs of the bank (The non-breaching party)? The $16 over draft has to be paid back (She did over draw the account and the $16.00 is NOT hers) and a reasonable fee for THE COSTS INCURRED BY THE BANK FOR THE OVERDRAFT. I can not see a court ruling $342 in fees somehow approximates the costs incurred by the bank on the overdraft.

Thus I believe these fees are illegal Penalties NOT Liquidated Damages.

Please note, check with an attorney to make sure your state has not adopted some law permitting such fees. Given the ability of the banks to lobby local and state Government such a law would not surprise me (Through I know of none at the present time).

One more comment, I do NOT expect the bank to do anything about the "Fees". The bank knows the fees are unenforceable, but once accessed and paid, to get the money back the Account holder will have to sue the bank (and incur the costs of an attorney to do so). Thus the bank will not sue, but it is rare for a customer to sue also. The fees are always smaller than the cost of litigating the fees, and any litigation will be in your local county court. Thus my advice in this case is for her NOT to pay the fee and see what the bank does. It may send threatening letters but I doubt it will file a lawsuit (It does not want to incur the cost of paying for an attorney either).

[mmm]

12. Thank You for the great info

You obviously know your stuff

[ronnykmarshall]

5. That's insane.

I work for Union Bank of California and we'd rather close an account before having rack up NSF charges like that.

I know that in the 1980's Wells Fargo was sued for doing that. There was supposed to be a cap on NSF charges. I know that we charge $5 per day when an account is overdrawn, most of the time the branches will reverse the charges as long as the overdraft is paid.

Look into this. You're getting ripped off.