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Wells Fargo loses class action lawsuit

NEW YORK — A federal judge in California ordered Wells Fargo & Co. to change what he called “unfair and deceptive business practices” that led customers into paying multiple overdraft fees, and to pay $203 million back to customers.

In a decision handed down late Tuesday, U.S. District Judge William Alsup accused Wells Fargo of “profiteering” by changing its policies to process checks, debit card transactions and bill payments from the highest dollar amount to the lowest, rather than in the order the transactions took place. That helped drain customer bank accounts faster and drive up overdraft fees, a policy Alsup referred to as “gouging and profiteering.”

The ruling detailed the experiences of two Wells Fargo customers who used their debit cards for multiple small purchases, and were then charged hundreds in overdraft fees because the order the purchases were cleared by the bank depended on the amounts. The judge found the customers, who were part of a class action, were not properly informed of the bank’s policies on processing payments and were unaware the bank would allow debit purchases to go through when their accounts were overdrawn.

“Internal bank memos and e-mails leave no doubt that, overdraft revenue being a big profit center, the bank’s dominant, indeed sole, motive was to maximize the number of overdrafts,” Alsup wrote. That policy would “squeeze as much as possible” from customers with overdrafts, in particular from the 4 percent of customers who paid what he called “a whopping 40 percent of its total overdraft and returned-item revenue.”

The judge dismissed Wells Fargo’s arguments that customers wanted and benefited from the policies, and detailed evidence he said showed efforts to obscure the practices in statements and other materials. Wells Fargo’s online banking system, for example, would display pending purchases in chronological order, “leading customers to believe that the processing would take place in that order.”

“The supposed net benefit of high-to-low resequencing is utterly speculative,” he wrote. “Its bone-crushing multiplication of additional overdraft penalties, however, is categorically assured.”

Alsup also criticized the bank for allowing overdraft purchases after accounts had been drained by offering a “shadow line of credit” that customers were unaware existed.

The decision noted that the Federal Reserve has outlawed some of the practices detailed in the case, most notably debit card overdrafts permitted without customers agreeing to accept overdraft protection.

Judge Alsup ordered Wells Fargo to stop posting transactions in high-to-low order by Nov. 30 and to reverse overdraft fees charged to customers from Nov. 15, 2004, to June 30, 2008, as a result of the policy. A study cited in the decision by a Wells Fargo witness put the restitution at “close to $203 million.”

Wells Fargo spokeswoman Rochele Messick said the bank is “disappointed” with the ruling. “We don’t believe the ruling is in line with the facts of this case and we plan to appeal,” she said.

Messick noted that Wells Fargo changed its policies earlier this year, and customers can no longer incur more than four overdraft charges in one day.

Wells Fargo shares closed Wednesday trading down $1.47, or 5.3 percent, at $26.30, as the broader markets dropped sharply on economic concerns, with banks being particularly hard hit.

The case, heard in the U.S. District Court for Northern California, is Gutierrez vs. Wells Fargo.

27 comments

  1. Alexandra Calleros

    Help I got charged 48 in one year do the math. Yikes!! Where I sign up get compensate back all the mula I got charged. I been with wells for 5-6 yrs maybe longer.

  2. To be honest, it is about time … they did the same thing to me until i finally left their institution. I think within a week, i was charged about $200 in overdraft fees over things that cost about $3.00. Considering they waited to process everything until the larger charge went through and ended up overdrafting me five or six times. Who know how many times that happened. I wish I would have know about the class action suit … personally, I would never do any business with Wells Fargo again.

  3. Justice finally prevails!

    In our case, Nevada Judges chose to disregard Nevada Statute NRS205.372 and allowed Wells Fargo to continue make mortgage loans and foreclose homes based on hugely
    inflated appraisals.

    Wells Fargo committed prosecutable crime against us. We lost our home. Something is wrong with this picture. Here are the facts.

    1. it is illegal for Wells Fargo to make mortgage loan to us based on hugely inflated appraisal.

    Fact: – Wells Fargo’s fraudulent appraisal valued our home at $718,000
    - Wells Fargo’s own review appraisal valued our home at $475,000
    - Nevada Attorney General’s office suspended the appraiser’s license for committing appraisal fraud on our home.
    - Nevada Appraiser Licensing Board mandated the appraiser to complete appraisal fraud course before regaining his real estate appraiser license.
    - Nevada Revised Statue NRS 205.372 states that it’s category C felony to make mortgage loans based on fraudulent appraisal.
    - Cases of Attorney General’s indictments against attorneys, loan brokers for teaming up make fraudulent loans to defraud homeowners.

    2. it is illegal for Wells Fargo to wrongfully foreclose our home based on fraudulent appraisal and mortgage loan.
    You can find all the facts on our website. http://www.wellsfargomortgagefraud.com

  4. Do we need to be part of the classaction suit? I closed my account with wellsfargo because I was forever drowing in overdraft charges. If anyone knows where we can get any information

  5. Wells Fargo has been doing this to me for years & years. They owe me thousands & thousands of dollars. I kept thinking that there was something wrong with the way that I am calculating everything. I knew that something was wrong but didn’t know how to prove it. Do I need to get my own attorney or do they have to pay everyone in the State of California that they did this to?

  6. I closed my account with Wells Fargo a month ago due to excessive fees. I’m wondering if any of you know where previously cancelled customers stand in this law suit as far as being compensated.

  7. I also paid WF thousands in OD fees and left in 2007 with them refusing to close my account which had incurred over $500.00 in OD fees in a very short period of time in early 2007. They ran checks through several times, and processed my debit card with OD fees repeatedly without even informing me that I was overdrawn! Like many others here, I thought I must be doing my math wrong, or forgetting to subtract payments, and spent HOURS on the phone with them. They would not negotiate at all, and put my “debt” into a national registry of bad debts, so that I cannot open a checking account anywhere, except my old credit union which charges me a usurious $25.00 mo. for a simple checking account. These people are outright thieves. How can I be a part of the class action suit against them?

  8. Has anyone received an answer to where/can we sign up for the lawsuit? I have argued until I’m blue in the face with the \customer service\ people at my branch for years over this. The sad part is, 203 million won’t touch WF’s pocket. May as well have been $203.

  9. Wells fargo loan modefication is a big fruad they suck you in for a year of paper worke then they say forget the past lets start allover again after they put you on a payment plan and you paid it on time what is this payment tryle period.

  10. $5740.00 in charges since 9/06-present. the have even taken my whole paycheck. they processed items dated for the next day before my check was deposited the same night. there has been many times I have had 300-500 charges in one week in a month. I want my money back. they charged me overdraft for every thing. if there was 15 items dated for tommorow. it would take them first charge me the 35 dollars a piece then take my paycheck. if it would have let my check go through i would have had plenty of money. I want to know what to do to get my money back. everyone told me that they could not do it. even after the lawsuit they still did it. my bank statments are fun to look at.

  11. At last !!!

    What legal firm do I contact about this case.

    I belive I am also one of the bank customers that got robbed.

  12. How can they continue to follow the same practice of rearranging transactions after this lawsuit. I am already out well over 10000.00 from their unfair practice…I am ready to fight. Gouging and Profiteering is still going on I am getting out after I prove how much they have already stollen from me.

  13. Do you know a website to add our name to Class Action with wells Fargo.
    Anne

  14. SO DO WE NEED TO SIGN UP? OR DO THEY JUST DISBURSE THE MONEY TO ANYONE WHO HAD AN ACCOUNT BETWEEN THE DATES GIVEN ABOVE?

  15. How do I sign up, I keep getting overdrafts, and even when my money comes in they keep putting the money in before it clears so that they can get the overdraft at least 2 times, and have done it 3 to 4 times a month. And they made sure I couldn’t pay my medical payment.

    How do I get in on this law suit. This is a very bad thing that they are doing.
    John Kendall

  16. What legal firm should I contact? I concur, with amy fisher, they have done it to me, 3 or 4 months. For example I had the money to pay a home equity loan, and it was about to clear that day, and they put submitted the amount I owed before it cleared. And not only that they charged another overdraft. Now I agree, I don’t make much money, but I don’t need Wells Fargo’s help in depleting my income more. Especially with my disability of End Renal disease.

    How do I find a way to stop them from doing this?

  17. Wells Fargo owes me thousands in back overdraft fees. I finally had to close my acct. with them after 16 years. Where do we sign up to be compensated?

  18. I have had not only this issue but i have also had problems with them holding deposits for an extra day (I had the deposit in by 3:30 EST). Which allowed them to create numerous overdrafts. I finally closed my account. Can you believe they posted items (which I had cancelled) two weeks later and charged me an over the limit and an overdraft. The original company has credited my account, but when contacting Wells they say I still owe them. Now I have collection agencies calling me for what amounts to thier charges. I asked the bank for copies of my statements since I opened my account; so I can add up my charges. They want me to pay almost $200.00 for the copies. Where can I sign up for restitution?

  19. RESITUTION HELP
    You can go to the link provided

    http://www.bank-overdraft.com/cases/wellsfargo.htm

    click on the link:
    A copy of the Court’s order can be found here.

    Restitution starts on page 85.

  20. Interested in knowing about any class action lawsuits against Wells Fargo for distorting home appraisal values at purchase. We are recent victims of fraud by Wells Fargo on a home loan secured 16 months ago. When we went to refinance recently, only then did we discover that our initial home appraisal was grossly distorted and approved by Wells Fargo.

    Thank you for any information you might provide.

  21. I would frequently have my deposits reversed and overdraft fees accrued until I owed them more money than I was ever spending. After a while I would owe them as much as $1400 a month. When I started cashing my checks first and depositing cash they started delaying the posting of the deposit. I finally got fed up and requested that they close my account. I gave them $2000 to pay any overdrafts that were charged and should have had a refund due to me, NO, they kept charging me overdraft fees to try and transfer money from the checking account (I did mention I had asked for it to be closed, right?) to my (also closed) savings account. After 6 attempts and $300 in fees they sent me to collections and closed my account and labeled it as “Closed due to Abuse”. I can’t therefore get another checking account. I was and am completely humiliated. The funny thing is we only started banking with them after they sent us a “check” that was really a loan request for which we needed to repair a car. They then pressured us into refinancing our home at 1/2 percent higher than we had and a $5000 prepayment penalty. Needless to say….. The only time we have ever been late with a mortgage payment was when we paid the payment online from our checking acct to Wells Fargo Financial (it took 6 days to clear). We paid the $5000 penalty and went to Bank Of America Home Loans and every time I pay my house payment they ask me why I don’t have an acct there I have to tell them my “Wells Fargo” story. STAY AWAY FROM WELLS FARGO PEOPLE UNLESS YOU WANT TO THROW YOUR HARD EARNED MONEY AWAY!!!!!!!!!

  22. Does anyone know if anything about this ruling has changed. Wells fargo still has a policy of posting withsrawals in high to low order to this day (Feb 2011). Is there any action I can take against them?

  23. Wells Fargo Home Mortgage has ruined my life and life expectancy. I have lost my family home that has been in my family since 1879. I have 20+ family members buried on this very special to me property. I’ve worked diligently with these crooks for over a year. They do not consider disability payments as income. They finally did a three month trial loan modification with me, which I met every month. I then sent in the fourth payment that they took. That fourth month they sent me a notice on the 17th of April saying they were selling my home on the 27th of April. I was on the court house steps and it did not sell but did go back to these crooks. I mean who cares how or where your money comes from? I could have kept up with their modification by renting rooms, robbing banks, selling drugs, or robbing homes, but I am not a criminal by any means. The only crime I have ever been convicted of was A DUI. In this screwed up world I don’t know too many people who have not, and unfortunately know a few that are in waiting. What the government of this country wanted or said they wanted to help the people who were honest but upside down in their property. They sure screwed that effort out. What they should have done in my opinion is with very little retaining taken over Freddie Mac and given low interest loans at the current market value of their homes with the condition that the banks had to take it. This would not only have paid these crooked bastards back, but revived everyone’s recovery issues. But instead we just keep printing worthless dollars, fight wars for no reason, elect worthless politicians and keep paying these fat pigs millions. We destroy the middle class, have millions of people homeless and really do nothing to cure the problem. I was injured working for my county. I now have no income but my life I’m selling at a snail’s pace as no one has any money. I would not be a good homeless person, and having to sell your whole life off is so depressing it just makes me want to vomit. There is no work, especially for someone who is disabled. Hell, I’m only 53 years old and feel my life is over! Just working for the county I worked for, I can tell you that there is so much corruption and abuse of fund that it is ridiculous. Now think of all the counties in this country. They are all as crooked. I don’t understand how all these people can afford to drive their big SUVs, trucks, boats and motorcycles. You know they are underwater and will soon be on the same sinking ship!

  24. Anyone whom allows the class action suit to include them is very foolish. You will recieve pennies on the dollar for what they stole from you. Why do you think all the banks are trying to settle. Im suing them alone, and will be asking for punitive damages for what they have done to my finances, credit, and for all the stress and hardship the banks cause my family and I as a result of the theft of my money. They are liable for so much more then the amount they stole here people. Wake up and file your own lawsuit! Ther stole over 10,000.00 from me. I guarantee they will wish they haddent when I am done with them.

  25. tell me who i need to contact to be added to the lawsuit list. i no i was done wrong.

  26. I would like to know who to contact to be added to tbe lawsuit list. I had an account for 15 years and had the same thing happen to me and had to close my account.

  27. I would like to participate in the class action for wells fargo. I had an account in 2007and my account was closed

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