Wells Fargo to Forfeit $203 Million in Overdraft Case
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Wells Fargo Instructed to Forfeit $203 Million in Overdraft Case

On May 15, 2013, a federal judge had again instructed Wells Fargo & Co. to forfeit $203 million to resolve class action litigation charging it with enforcing unnecessary overdraft cost on checking account customers, restoring a reward that had been dismissed in 2012. On May 14, 2013, U.S. District Judge William Alsup re-established a fine he initially enforced in August 2010, stating the fourth-biggest U.S. bank breached a California law that safeguarded consumers against fraudulent misrepresentations.

The clam was detached from national litigation that was still expected in Miami federal court against nearly twenty lenders, as well as Wells Fargo, over unnecessary overdraft cost. Consumers frequently sustained the approximately $25 or $35 cost when they overdrew their checking accounts by means of debit card acquisitions. Since 2001, Wells Fargo had been charged with enlarging overdraft cost by handling such acquisitions from the biggest to the least instead of sequentially. It had since altered its account posting procedures, as had most competitors.

In December 2012, the Ninth U.S. Circuit Court of Appeals dismissed the initial $203 million reward, stating federal law anticipated a component of a California law on which Alsup had depended on in enforcing an injunction to discontinue inappropriate cost procedures. However, the Ninth Circuit declared that federal law did not supersede California consumer law regarding deceptive or ambiguous versions and instructed Alsup to evaluate the case once more.