Source: Adam J. Rose / The Huffington Post
Unless a consumer chooses to opt-in for overdraft protection, their ATM and debit purchases will be declined if an account has insufficient funds. Prior to Sunday, banks could automatically enroll their customers in the service, which covers the point-of-sale transaction but can result in steep penalties. Shoppers at the counter might turn red with embarrassment when their purchase is refused, but the alternative is for their account to go further into the red — with fees up to $35 for each swipe of the card.
When added to the cost of a 99-cent taco, $35.99 doesn’t exactly fit on the value menu. Just last week, a federal judge accused Wells Fargo of “profiteering” by employing overdraft policies that led customers to pay multiple fees. The bank was ordered to return $203 million to its customers. However, Wells Fargo intends to appeal and several other banks have indicated that they will not change their policy of processing the day’s largest transactions first (as opposed to chronological order), which increases the likelihood of multiple small transactions incurring overdraft fees.
But if customers don’t have overdraft protection anymore, the banks can’t collect.
Banks were prohibited from automatically adding new customers to overdraft protection programs starting on July 1. The latest Federal Reserve rule goes a step further by dropping the service for existing customers who never asked for it. Newsweek reports that banks have aggressively encouraged their customers to stay enrolled.
To read this article in its entirety visit The Huffington Post.
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