Wells Fargo Cuts Overdraft Fees After Settling a Class-Action Lawsuit
After settling a class-action lawsuit, Wells Fargo has decided to change its overdraft fee policy. Wells Fargo is a leading financial services company.
Jan. 13 2022, Published 2:37 p.m. ET
Wells Fargo, a leading financial services company, reportedly has a history of “cheating” and “defrauding” its customers. In July 2021, a California judge granted preliminary approval of a $10.5 million settlement for individuals who were charged overdraft fees for non-recurring transactions, particularly those involving Lyft and Uber.
The company was accused of breaching its contract with customers who hadn't opted into Wells Fargo’s overdraft service, which “promised that Wells Fargo would not charge overdraft fees for non-recurring transactions.” How's the settlement being disbursed and what changes is Wells Fargo making to its overdraft policies?
If you were charged overdraft fees by Wells Fargo for an Uber or Lyft transaction, you might be entitled to compensation.
If you're a Wells Fargo account holder and you were charged overdraft fees on an Uber or Lyft transaction that was made between January 2014 and February 28, 2018, you might be entitled to a cash payment “in exchange for the release of [your] claim.” Wells Fargo was expected to automatically distribute cash payments to account holders who were directly affected by their negligence from the fund.
If you didn’t receive a cash payment from Wells Fargo and you think that you're entitled to one, you’re encouraged to speak with a qualified lawyer. An attorney can determine if you’re eligible to receive a payment and what the deadline is for funds to be issued.
Wells Fargo and Bank of America updated their overdraft policies after facing litigation.
On January 11, 2022, Wells Fargo announced that it would be updating its overdraft policies in an effort to help consumers avoid fees and “meet short-term cash goals.” The company said that these changes will give certain customers earlier access to direct deposit—a feature that many other financial institutions already offer—and a 24-hour grace period before assessing overdraft fees.
Essentially, this means that if a purchase is processed on your account and you don’t have the funds to cover it, Wells Fargo will give you a 24-hour grace period to deposit the funds as opposed to immediately issuing an overdraft fee. This feature will extend to consumers between the months of July and September 2022.
An additional benefit Wells Fargo will be offering to consumer deposit customers is the elimination of NSF (non-sufficient fund) fees. By the end of March 2022, customers won't be required to pay a returned item fee if the bank returns a check or electronic transaction unpaid due to a lack of funds.
Mary Mack, the CEO of Wells Fargo Consumer and Small Business Banking, said that these enhancements “add to the changes we’ve made previously and give our customers more choice and flexibility in meeting their needs.”
Bank of America also announced changes to its overdraft fee policy.
On January 11, 2022, Bank of America also announced that it will be reducing its overdraft fees from $35 to $10 beginning in May 2022. The company said that it will also be eliminating the “transfer fee associated with its Balance Connect for overdraft protection service in May.”
With the economy still struggling to make a comeback due to the COVID-19 pandemic, financial institutions like Bank of America and Wells Fargo should be supporting their lower-income customers to help them reach financial stability. According to Forbes, overdraft fees alone cost consumers approximately $12.4 billion in 2020, particularly low-income Americans.
