Judge to Wells Fargo: "ENOUGH IS ENOUGH"

Let's face it, as Americans we are pretty fed up with the double set of rules that banks have.  Protected by Congress and receiving billions of dollars in TARP bail out funds AND being free to gouge consumers with their credit card practices and over draft fees. Yesterday a federal judge in the fine state of California told Wells Fargo "ENOUGH IS ENOUGH".

U.S. District Judge William Alsup backed up his slap on the wrist with ordering Wells Fargo to pay back $203,000,000 (that's $203 MILLION BUCKS to consumers for "profiteering" through their overdraft fees.  According to the judge's ruling, Wells Fargo's internal emails and documentation provide evidence that the "overdraft department" was a huge profit center of the bank and the intent of the bank was to ensure as many overdrafts as possible.

The basis of the ruling is that, beginning in 2001, Wells Fargo started processing checks, automatic bill pays and debit/credit transactions in the order of the highest dollar balances first; regardless of actual timing of the processing of the transaction.  To a consumer, this translates to the very real fact that a $4.00 Starbucks coffee could cost your an additional $37.00 (or similar amount) fee if your car payment was posted on the same day.  A stop at the grocery store, dry cleaners and pharmacy would add an additional $37.00 per transaction.  Far cry from the one time fee of $37.00 if the smaller transactions were run through the system in front of the car payment.

The judge also negated Wells Fargo's argument that "consumer's really wanted the overdraft protection" by saying the bank practices show that the overdraft policy intent was to obscure the real charges from the consumer.  Further, the bank provided a "shadow line of credit" on bank accounts that had already been depleted resulting in continuous and onerous overdraft fees. 

Most incriminating to Wells Fargo's case is that 4% of their customers have been paying 40% of the overdraft fees of the bank.  Clearly, the overdraft policies at Wells Fargo have been drafted and created to take advantage of the very people who could afford the overdraft fees the least.

The judges ruling requires Wells Fargo to change their "high to low" transaction processing procedures by November 30, 2010  and requires refund of all overdraft fees collected form Nov. 15, 2004 to June 30, 2008 if they were a result of this unscrupulous manipulation of processing. 

Of course, Wells Fargo's is "disappointed" by the ruling and they still have plenty of TARP funds and overdraft fees to pay countless attorney's for countless hours of litigation; but my real sense is this ruling will stick.  And, Judge Alsup's ruling to this bank may well have numerous other banks shaking in their proverbial boots.  At least one judge has the courage to tell banks:  "ENOUGH IS ENOUGH".