When there are several current debits to an account, many banks apply the debits in reverse order of their value and not the chronological order in which they were actually made. Therefore, no matter the order received, the largest current debit is applied to the balance FIRST, then the second largest debit, third largest debit and so forth. This is important because, if for some reason that largest debit makes you go over your balance, you are then charged overdraft fees for every other debit – even if the remainder of the debits would have been covered by your initial balance.

Based on this system of accounting, excessive bank overdraft fee lawsuits have been filed against numerous banks. The lawsuits allege that these banks have used unethical practices to send bank accounts into overdraft mode. More specifically, the lawsuits allege that the reordering of credits and debits so that customers are forced into unwarranted overdraft fees is outrageous.

Legislation currently under consideration in Congress would prohibit banks from levying more than one overdraft fee per month or six per year. According to a Bill under consideration in the House, overdraft fees would be subject to the Truth in Lending Act, requiring consumers' permission before enrolling them. Further, it would prohibit rearranging the order in which transactions are posted, which can trigger an overdraft, and it would require fees to be in proportion to the amount overdrawn (i.e. a $5 purchase could not have a $35 fee).

This proposed legislation could save each bank customer hundreds of dollars, and prevent banks from preying on these unsuspecting customers to the tune of millions of dollars each year.

Further complicating the issues with this practice is that bank customers may have never actually requested any type of overdraft protection. If you have been INVOLUNTARILY enrolled in overdraft protection services, you may be eligible to seek compensation.

You may also be eligible to seek compensation if you enrolled in overdraft protection services and found the terms of your service to be false, misleading or deceptive.

If you have been the victim of deceptive bank overdraft protection practices, contact us.