Monday, June 01, 2009

For once, a good court ruling

The headline "California high court says bank doesn't have to pay $1 billion for overdraft fees" is actually incorrect. The court ruling is that Bank of America doesn't have to reimburse the overdraft fees that they charged their customers.

If people's accounts are overdrawn, then the bank is perfectly entitled to charge fees as previously agreed, which usually means the fees are deducted from the next credit to the account. There's absolutely no basis to question this. It doesn't matter that these disabled and/or seniors are "poor": an overdrawn account means that they're using money that doesn't belong to them, and the bank will charge a fee. The money belongs to the other depositors at the bank. The fee is partly to discourage overdrafts, and partly to compensate for the managers' time in reconciling accounts. The bank is entitled to charge that fee based on the agreement the customers voluntarily accepted when opening the accounts. As with all things, if you don't like the conditions, then take your business elsewhere.

This all started become some twit evidently saw new money in his account, which he should have realized was more than what ought to have been. Instead of notifying the bank of a probable error, he was stupid enough to debit more than what he really had. It reminds me of the idiot family that went to an ATM that suddenly started spitting out tens of thousands of dollars. Instead of bagging and returning it, they treated it as having fallen from heaven and started spending it all. But don't be fooled: banks will track down the error, and the family was caught and ordered to pay it back. I can't find an article on that American family, but here's one in England that similarly burned through other depositors' money, and they were properly jailed for it.

It may start with a bank's error, but a bank's error does not force people to act irresponsibly. Some might say this "disabled man" had cause to complain, because the bank charged him a fee after reversing their error. However, he made the serious error: he should have double-checked how much his account should have, rather than treating it like Christmas.

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4 Comments:

Blogger W.C. Varones said...

managers' time in reconciling accounts?

They have computers for that now. The cost is miniscule. Overdraft fees are a profit generator.

Not that that has any bearing on the ruling.

Tuesday, June 02, 2009 6:49:00 PM  
Blogger Perry Eidelbus said...

A lot of things in finance/banking are highly computerized, but it still requires human intervention to examine figures and make sure that the machines are working correctly. There's not as much labor cost as before, but still some. (You can personally and professionally trust me on this.)

It's a profit-generating deterrent, that's all.

Tuesday, June 02, 2009 8:14:00 PM  
OpenID creakypavillion said...

Test

Saturday, June 06, 2009 10:13:00 PM  
Blogger John A said...

OK, I agree about that case. But OTOH -

When I opened my checking account, I was offered a secondary contract to allow overdrafts, to which a fee would apply. I turned it down, saying I would rather that checks which would cause an overdraft be refused, and I was OK with the $10 handling fee for that.

Three months later, the bank let a check go through for one dollar more than was actually in my account, and charged me $30 for the "privilege" of being "allowed" an overdraft, despite this.

I was not happy. The poor reps I talked with said it was bank policy to cover up to a certain amount, nothing they could do. They could not tell me what amount would be so covered, nor even reduce the fee to that of a "bounced" check.

Wednesday, June 10, 2009 11:20:00 PM  

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