How the Sneaky Hands of the Big Banks Are Working Overtime to Rip You Off

[Modbert]

t r u t h o u t | How the Sneaky Hands of the Big Banks Are Working Overtime to Rip You Off

One of the most pernicious of these predatory practices is the overdraft fee. It's one of the biggest revenue streams for banking behemoths today. In 2009, banks reaped over $38 billion in overdraft fees from their own customers, while posting a total combined profit of just $12.5 billion. Without overdrafts, many banks would have scored massive losses last year, and possibly gone under. Instead, they booked epic bonuses.

It can come as a huge shock to get hit with a rash of overdraft fees. You open a bank statement to find that you are not only broke, but deep in the hole thanks to several $30 or $40 charges. Your first reaction is shame. How could I have let this happen? But looking into the ways that banks conduct their overdrafts, you come to realize that you've simply been scammed.

Banks are actively deceiving their own customers. According to an FDIC study, 75 percent of all banks don't even tell people they've been automatically enrolled in "overdraft protection" programs. Many consumers don't even realize that their accounts are subject to these charges—they assume that anything that puts them past zero will simply be denied.

It gets much worse. Once banks realized that overdraft fees could be a real cash cow, they developed "fee-harvesting" software, which reorganizes the order of your checking transactions to maximize the number of overdraft fees for the bank. In other lines of financial business, this is called "backdating," and it's considered "fraud."

How the Scam Works

Say you've got $100 in your checking account, and you decide to pay some bills and run some errands. You spend $30 on gas and another $20 on your water bill. Later, you head to the grocery store and spend $81—oops!—on groceries. Banks, of course, could notify you that your $81 purchase was going to send you over the edge and result in an overdraft fee. They don't, because they don't want to risk that you'll deny the purchase and reject the fee.

But in addition to neglecting this safeguard, the bank automatically processes your $81 purchase ahead of your previous charges. As a result, you do not get hit with one unwanted overdraft fee for your groceries—you get hit with three, because your costliest purchase was processed before the others—even though you made the cheaper purchases first.

Agencies have been voicing concerns about overdraft fees for years. The FDIC published a damning study on the practice in 2008, and the Federal Reserve began issuing warnings to the banking industry about unfair overdraft programs in 2004. But up until 2004, overdrafts were generally viewed as a form of short-term credit—the bank is basically lending the consumer money that is paid back with interest. But the interest rates are so egregiously predatory—the average overdraft fee amounts to 1,067 to 3,520 percent (PDF), according to the FDIC -- that they simply would not be tolerated if regulators had to think of them as loans.

Even this reclassification scheme wasn't enough for Wall Street, which managed to violate even the much weaker consumer protection rules on fees 335 times a year, according to a report by the Government Accountability Office. The GAO also found that consumers who went to an actual bank branch were unlikely to be able to obtain information about basic overdraft terms and conditions, much less comprehensive information about how their checking accounts could be gamed.

The Fed is offering another weak response to the overdraft insanity today. By mid-August, the Fed will require consumers to "opt-in" to overdraft programs, instead of being automatically enrolled without their consent. It's a step forward that will likely limit some of the overdraft profits banks currently enjoy. But it will not require that the programs be fundamentally changed. It will not cap the amount of the fees charged, or the number of fees charged, nor will it require consumers to be notified when a purchase or withdrawal will result in a fee. Banks will take a modest hit from the new rules as consumers choose to back out of the program—but the fundamentally obscene business model will remain.

Thoughts USMB?

 

[AVG-JOE]

t r u t h o u t | How the Sneaky Hands of the Big Banks Are Working Overtime to Rip You Off

One of the most pernicious of these predatory practices is the overdraft fee. It's one of the biggest revenue streams for banking behemoths today. In 2009, banks reaped over $38 billion in overdraft fees from their own customers, while posting a total combined profit of just $12.5 billion. Without overdrafts, many banks would have scored massive losses last year, and possibly gone under. Instead, they booked epic bonuses.

It can come as a huge shock to get hit with a rash of overdraft fees. You open a bank statement to find that you are not only broke, but deep in the hole thanks to several $30 or $40 charges. Your first reaction is shame. How could I have let this happen? But looking into the ways that banks conduct their overdrafts, you come to realize that you've simply been scammed.

Banks are actively deceiving their own customers. According to an FDIC study, 75 percent of all banks don't even tell people they've been automatically enrolled in "overdraft protection" programs. Many consumers don't even realize that their accounts are subject to these charges—they assume that anything that puts them past zero will simply be denied.

Agencies have been voicing concerns about overdraft fees for years. The FDIC published a damning study on the practice in 2008, and the Federal Reserve began issuing warnings to the banking industry about unfair overdraft programs in 2004. But up until 2004, overdrafts were generally viewed as a form of short-term credit—the bank is basically lending the consumer money that is paid back with interest. But the interest rates are so egregiously predatory—the average overdraft fee amounts to 1,067 to 3,520 percent (PDF), according to the FDIC -- that they simply would not be tolerated if regulators had to think of them as loans.

Even this reclassification scheme wasn't enough for Wall Street, which managed to violate even the much weaker consumer protection rules on fees 335 times a year, according to a report by the Government Accountability Office. The GAO also found that consumers who went to an actual bank branch were unlikely to be able to obtain information about basic overdraft terms and conditions, much less comprehensive information about how their checking accounts could be gamed.

The Fed is offering another weak response to the overdraft insanity today. By mid-August, the Fed will require consumers to "opt-in" to overdraft programs, instead of being automatically enrolled without their consent. It's a step forward that will likely limit some of the overdraft profits banks currently enjoy. But it will not require that the programs be fundamentally changed. It will not cap the amount of the fees charged, or the number of fees charged, nor will it require consumers to be notified when a purchase or withdrawal will result in a fee. Banks will take a modest hit from the new rules as consumers choose to back out of the program—but the fundamentally obscene business model will remain.

Thoughts USMB?

So far I am happy with the decision to move everything cash into credit unions - $5 overdraft fee and they move the money from savings to cover the boo-boo.

(Insert your preferred Deity here) bless 'Member Owned'.​

 

[topspin]

Whambulace.
I and most people don't overdraft.

 

[Oddball]

t r u t h o u t | How the Sneaky Hands of the Big Banks Are Working Overtime to Rip You Off

One of the most pernicious of these predatory practices is the overdraft fee. It's one of the biggest revenue streams for banking behemoths today. In 2009, banks reaped over $38 billion in overdraft fees from their own customers, while posting a total combined profit of just $12.5 billion. Without overdrafts, many banks would have scored massive losses last year, and possibly gone under. Instead, they booked epic bonuses.

It can come as a huge shock to get hit with a rash of overdraft fees. You open a bank statement to find that you are not only broke, but deep in the hole thanks to several $30 or $40 charges. Your first reaction is shame. How could I have let this happen? But looking into the ways that banks conduct their overdrafts, you come to realize that you've simply been scammed.

Banks are actively deceiving their own customers. According to an FDIC study, 75 percent of all banks don't even tell people they've been automatically enrolled in "overdraft protection" programs. Many consumers don't even realize that their accounts are subject to these charges—they assume that anything that puts them past zero will simply be denied.

Agencies have been voicing concerns about overdraft fees for years. The FDIC published a damning study on the practice in 2008, and the Federal Reserve began issuing warnings to the banking industry about unfair overdraft programs in 2004. But up until 2004, overdrafts were generally viewed as a form of short-term credit—the bank is basically lending the consumer money that is paid back with interest. But the interest rates are so egregiously predatory—the average overdraft fee amounts to 1,067 to 3,520 percent (PDF), according to the FDIC -- that they simply would not be tolerated if regulators had to think of them as loans.

Even this reclassification scheme wasn't enough for Wall Street, which managed to violate even the much weaker consumer protection rules on fees 335 times a year, according to a report by the Government Accountability Office. The GAO also found that consumers who went to an actual bank branch were unlikely to be able to obtain information about basic overdraft terms and conditions, much less comprehensive information about how their checking accounts could be gamed.

The Fed is offering another weak response to the overdraft insanity today. By mid-August, the Fed will require consumers to "opt-in" to overdraft programs, instead of being automatically enrolled without their consent. It's a step forward that will likely limit some of the overdraft profits banks currently enjoy. But it will not require that the programs be fundamentally changed. It will not cap the amount of the fees charged, or the number of fees charged, nor will it require consumers to be notified when a purchase or withdrawal will result in a fee. Banks will take a modest hit from the new rules as consumers choose to back out of the program—but the fundamentally obscene business model will remain.

Thoughts USMB?

Why...why...why.....This is just more proof of how those dirty dogs need to be regulated even more!!!

 

[elvis]

t r u t h o u t | How the Sneaky Hands of the Big Banks Are Working Overtime to Rip You Off

One of the most pernicious of these predatory practices is the overdraft fee. It's one of the biggest revenue streams for banking behemoths today. In 2009, banks reaped over $38 billion in overdraft fees from their own customers, while posting a total combined profit of just $12.5 billion. Without overdrafts, many banks would have scored massive losses last year, and possibly gone under. Instead, they booked epic bonuses.

It can come as a huge shock to get hit with a rash of overdraft fees. You open a bank statement to find that you are not only broke, but deep in the hole thanks to several $30 or $40 charges. Your first reaction is shame. How could I have let this happen? But looking into the ways that banks conduct their overdrafts, you come to realize that you've simply been scammed.

Even this reclassification scheme wasn't enough for Wall Street, which managed to violate even the much weaker consumer protection rules on fees 335 times a year, according to a report by the Government Accountability Office. The GAO also found that consumers who went to an actual bank branch were unlikely to be able to obtain information about basic overdraft terms and conditions, much less comprehensive information about how their checking accounts could be gamed.

The Fed is offering another weak response to the overdraft insanity today. By mid-August, the Fed will require consumers to "opt-in" to overdraft programs, instead of being automatically enrolled without their consent. It's a step forward that will likely limit some of the overdraft profits banks currently enjoy. But it will not require that the programs be fundamentally changed. It will not cap the amount of the fees charged, or the number of fees charged, nor will it require consumers to be notified when a purchase or withdrawal will result in a fee. Banks will take a modest hit from the new rules as consumers choose to back out of the program—but the fundamentally obscene business model will remain.

Thoughts USMB?

Why...why...why.....This is just more proof of how those dirty dogs need to be regulated even more!!!

Yeah, let's nationalize the fuckers.

 

[editec]

They rock me $28 for an over draft.

And that's WITH protection in place.

They rock me $28 for an overdraft even if they won't honor it, too.

So why NOT have it?

 

[Pepe]

They rock me $28 for an over draft.

And that's WITH protection in place.

They rock me $28 for an overdraft even if they won't honor it, too.

So why NOT have it?

Anyone who requires "Overdraft Protection" needs to be required under Penalty of Law to attend Personal Financial Education Classes.

These are the same people who scream from their knees for the Gubmit to protect them from themselves.

And these same people are actually allowed to Vote.

Go figure.

 

[syrenn]

There was an old galagher joke reguarding overdrafts.

"The banks are taking more of what they KNOW you already don't have."

 

[AVG-JOE]

t r u t h o u t | How the Sneaky Hands of the Big Banks Are Working Overtime to Rip You Off













Thoughts USMB?

Why...why...why.....This is just more proof of how those dirty dogs need to be regulated even more!!!

Yeah, let's nationalize the fuckers.

No need. Turn the Federal Reserve into a 'Member Owned' national credit union charging reasonable rates like $5 for services like overdrafts (ass-u-me-ing the kiter has the dough available in savings), make loans at something between the 1/4% that they charge banks and whatever it is banks charge us based on our credit, and the fuckers will go out of business.

That's why they pay their mercenary lobbyists 7 figures and fund political campaigns to 8 figures.

 

[AVG-JOE]

They rock me $28 for an over draft.

And that's WITH protection in place.

They rock me $28 for an overdraft even if they won't honor it, too.

So why NOT have it?

Anyone who requires "Overdraft Protection" needs to be required under Penalty of Law to attend Personal Financial Education Classes.

These are the same people who scream from their knees for the Gubmit to protect them from themselves.

And these same people are actually allowed to Vote.

Go figure.

How about funding education to the point where every high school graduate can be required to have the skills to balance a fucking check book.

 

[Middleman]

My thoughts are, do as I do. I pay a $20 yearly fee for a $3000 line of credit on my account. If I write a check before my paycheck is electronically deposited, it takes the funds from the line of credit, which has a 12% interest. I check frequently, via the phone line, and will go transfer money ASAP to cover the check.

This allows me to continue to be a haphazard bookkeeper, pay small amounts of interest to do so, and never get a hefty overdraft fee.

 

[topspin]

Middleman equals smart man

 

[CrusaderFrank]

Yeah, not enough regulation. It's the root cause of every problem real or imagined.

Fucking banks charging you money so you don't pass a bad check, which happens to be a crime.

Fucking motherfuckers need to be regulated!

Regulated!

Where's my pitchfork?

 

[topspin]

How far from stealing is writing a bad check?

 

[CrusaderFrank]

OK, banks can't charge you overdraft and if your check bounces (which will no longer be a crime), that's just too bad for the capitalist pig who probably overcharged you anyway so he could make more profits!

Who's with me?

I still can't find my pitchfork

 

[Pepe]

They rock me $28 for an over draft.

And that's WITH protection in place.

They rock me $28 for an overdraft even if they won't honor it, too.

So why NOT have it?

Anyone who requires "Overdraft Protection" needs to be required under Penalty of Law to attend Personal Financial Education Classes.

These are the same people who scream from their knees for the Gubmit to protect them from themselves.

And these same people are actually allowed to Vote.

Go figure.

How about funding education to the point where every high school graduate can be required to have the skills to balance a fucking check book.

The Dems began moving the "Education Bar" down to the lowest common demoninator starting in the 60s.

If you graduated from HS before 1965, you had a "Skill Set" ready for an employer and that included Third Grade Arithmetic.

If you advocated those standards today, you would be called a racist, sheet wearing klucker.

Or worse, a Tea Bagger.

 

[CrusaderFrank]

Anyone who requires "Overdraft Protection" needs to be required under Penalty of Law to attend Personal Financial Education Classes.

These are the same people who scream from their knees for the Gubmit to protect them from themselves.

And these same people are actually allowed to Vote.

Go figure.

How about funding education to the point where every high school graduate can be required to have the skills to balance a fucking check book.

The Dems began moving the "Education Bar" down to the lowest common demoninator starting in the 60s.

If you graduated from HS before 1965, you had a "Skill Set" ready for an employer and that included Third Grade Arithmetic.

If you advocated those standards today, you would be called a racist, sheet wearing klucker.

Or worse, a Tea Bagger.

75% of American public high school students would fail the following 2 question test:

1. Including John Adams can you name 3 American Founding Fathers?

2. In what year did the War of 1812 occur?

 

[Modbert]

75% of American public high school students would fail the following 2 question test:

1. Including John Adams can you name 3 American Founding Fathers?

2. In what year did the War of 1812 occur?

Don't be stupid Frank. Then again, I remember when we had this discussion awhile back. I recall you avoiding to respond to me when faced with evidence by fraud by Bank of America and other banks.

 

[Pepe]

75% of American public high school students would fail the following 2 question test:

1. Including John Adams can you name 3 American Founding Fathers?

2. In what year did the War of 1812 occur?

Don't be stupid Frank. Then again, I remember when we had this discussion awhile back. I recall you avoiding to respond to me when faced with evidence by fraud by Bank of America and other banks.

I don't know anyone with an IQ higher than his number of legal white parents who isn't aware that the "Too Big to Fail" are ripping off anyone and eveyone in sight.

These same good folks are aware that Incest is agin the Law everywhere except between the Treasury and Wall Street, especially GS.

However, being too stupid to understand when you are being robbed is a personal problem.

No where in my 8th Grade Civics Class, circa 1958/1959, can you find an Enumerated Power that says Pepe is responsible for protecting stupid/ignorant people from themselves.

The Law is designed to protect you from me............not you from yourself.

 

[Gremlin-USA]

Thoughts USMB?

Ever heard the saying Buyer Beware?

I myself always ask questions at a Bank I am thinking of using, then I do not get ripped of or at least if I do, I know it is coming and have time to get the vaseline ready.

Not all Banks work this way and very few Credit Unions are this ruthless in their ripoff fees.

I am definitely not condoning what some of the Big Banks do to generate revenue, but sometimes as Individuals, we needs to pay attention and protect ourselves, we do not always need the Government to keep us as Sheep/Subjects.

When dealing with a Bank or anything else in Life, generally asking questions, Investigation and Common Sense will Prevail.


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