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Home >> Accounts >> Checking Accounts
Bank Plays Games with Deposits and Overdrafts
I had two pending bank transactions, very small, that would have caused me to be overdrawn. I asked the teller if I deposited cash if it would put the deposit in before the transactions to bring my account positive and avoid fees. She told me it would. The bank put my deposit through first which brought my account positive. Then the next Monday they charged me two overdraft fees before they posted the two transactions, so even though they told me my deposit went in first, they still say they had the right to charge overdraft fees for the two transactions that had not posted yet. Is this legal?
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 A bank and its customer ought to be able to agree on and be bound by an openly disclosed and clearly described schedule of fees for account services, including the payment of items that overdraw, or return of checks that would otherwise overdraw, an account. Key information about the nature of the fees and what events trigger them ought to be part of the open disclosure and description, however. In fact, the events triggering overdraft fees are required to be disclosed, at least in general terms, by federal regulation.
Secondly, it should be an embarrassment to your bank's management and sufficient reason for a refund, if a teller misrepresents how or whether fees will be imposed, especially when asked an apparently direct question. When tellers provide erroneous guidance, it's not because the teller wants to deceive a customer. It's generally because the teller wasn't given the right information, or the information was too complicated for the teller to understand. There's another troublesome possibility: the bank's process for assessing overdraft fees in such situations is simply too complex to be simply explained, to anyone.
The matter of pending transactions, often debit card transactions that have been authorized but not yet posted to an account, is contentious. Whether a bank should be able to assess an overdraft fee for an authorization hold that would result in an overdraft if the actual transaction posted, or should not assess a fee unless the actual account balance is driven negative by the live transaction is something that bankers and consumers can debate. If the fee is to be assessed is based on the hold, that fact ought to be clearly stated to a consumer as part of the bank's account opening disclosures, or later, before that feature is added to the bank's list of fees. To be fair to all concerned, you as the depositor, ought to be aware of your bank balance to avoid becoming overdrawn in the first place.
In this case, the outcome probably would not have changed even if the teller had given you the correct information. Your deposit would not prevent the bank from assessing the fees. However, if the bank had not prior to this event disclosed accurately that OD fees would be assessed based on the pending debits to your account, you are entitled to a refund, and the bank needs to provide its customers and tellers with updated OD fee information.
Published on BankingQuestions.com 7/27/09
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