AJC Watchdog: First Alert

Keeping watch on those who hold the public trust and money

Wells Fargo overdraft fee dispute being heard by 11th Circuit today

By changing the order of customers' debit transactions, Wells Fargo for years racked up extra money through overdraft charges. It worked like this: You have $100 in your checking account and first draw $25, then have a transaction for $75 and later another for $100. The bank would reorder the transactions, putting the $100 one first so it could collect overdraft fees on two charges instead of one.

Consumers filed class action lawsuits, claiming the practice was deceptive.

Today, at the 11th Circuit Court of Appeals in Atlanta, Wells Fargo will argue that customers must settle the dispute through arbitration, not in court.

Other banks, also sued for reordering transactions, settled long ago. They agreed to repay more than $1 billion to customers, according to news reports.

Wells Fargo stopped reordering transactions in 2014.

But the bank has spent years fighting the class-action suits, now consolidated as Dolores Gutierrez, et al, v. Wells Fargo Bank. The case was appealed to the 11th Circuit after a federal judge in Florida rejected the bank's motion to compel arbitration.

If the bank ultimately prevails in the case, individuals would have to pursue complaints themselves through the arbitration process.

Note: The Consumer Financial Protection Bureau has announced a rule to bar financial institutions from forcing customers to binding arbitration to settle disputes. It has said that most consumers won't wage that battle. The rule reportedly would not affect the Wells Fargo case.

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About the Author

Lois Norder is Senior Editor for Investigations in the newsroom at The Atlanta Journal-Constitution.