Wells Fargo Loses $203 Million in Court Case

A federal judge ordered Wells Fargo to pay back $203 million that it gained through “unfair and deceptive business practices” according to U.S. District Judge William Alsup. They were found guilty of profiteering by processing transactions out of order for bill payments, debit card charges and processing checks. With $35 overdraft fees on each transaction, Wells Fargo would process the largest transactions first, so that they could charge the $35 overdraft fee more often on each of the smaller transactions.

For instance, let’s say you use your debit card to buy a cup of coffee Saturday morning. Then you stop and get a burger. Then you make a few other small transactions. The next day you buy a couch for $900 and it puts you over by a few bucks. Instead of charging you $35 for going over on the couch, they would process the transaction for the couch first, then the smaller transactions so they can charge you $35 for each of the smaller transactions. This policy resulted in millions of dollars of profit for Wells Fargo since they began doing it in 2001, and eventually lead to this class action lawsuit.

The order essentially forces Wells Fargo to reverse those fees from Nov. 15, 2004, to June 30, 2008 that were processed in this manner, but didn’t impose any additional fines for their blatantly illegal actions, and the ruling may actually protect Wells Fargo from future class action lawsuits based on the practice. The ruling is akin to a car thief being told to give the car back without any additional punishment. the fact that this story is being sold to the public as a victory for the consumer is a bit of a stretch.

The case is Gutierrez vs. Wells Fargo and even after the ruling, Wells Fargo is allowed to charge customers up to 4 overdraft fees per day. Getting approved for credit has never been so much fun!