COMMENTARY | Bank of America recently won approval for $410 million settlement in a class-action lawsuit. The lawsuit claimed Bank of America maximized overdraft fees by waiting to process debit transactions or changing the sequence of transactions. The lawsuit basically accused the bank of manipulating accounts for personal gain. The $410 million seems like a huge amount of money, until the gravity of the amount of money made off the fees by the bank is realized at $4.5 billion.
Sure overdraft fees are avoidable, but if the bank manipulates things just right they can almost always come out ahead. While larger balance customers obviously do not have a problem, anyone living from pay check to pay check could have a bit of an issue. Suppose a bill scheduled to be paid on payday was posted to the account before the paycheck was deposited -- here comes a $35 fee. Say that same day a $2 coffee charge or a $5 newspaper charge also posted, and the hits just keep on coming.
Bank of America maintains throughout the settlement that nothing improper was occurring with debit transactions, and new regulations prohibit banks from processing debit transactions unless the bank receives permission from the customer. Perhaps transactions should simply be declined for customers who exceed their balance.
The settlement payout of $410 million still leaves Bank of America about $4 billion to the good, which is a pretty good investment. What customers should take from the whole ordeal, is to pay attention to their accounts. While Bank of America could very well have done nothing wrong, the volume of money made from overdraft fees is simply astonishing. Whether the recession or the economy in general factored into the problems is of little consequence, here in the new millennium when customers try to play "beat the bank," the bank always wins.
