Wells Fargo & Co. (WFC) must pay customers $203 million for manipulating debit-card transactions to boost overdraft fees, a federal appeals court in San Francisco held, upholding a lower-court ruling.
The case is replete with examples of Wells Fargo’s false and misleading statements about posting debit transactions and overdraft charges, justifying a federal judge’s decision last year to reinstate the restitution he awarded in 2010, a three-judge panel said today.
Wells Fargo, the largest U.S. home lender, changed the way it treated customers’ daily debit transactions and cash withdrawals in December 2001, posting those with the highest dollar amount first rather than in the order they occurred, customers said in a 2007 lawsuit.
The practice resulted in more overdrafts, with customers overdrawing their accounts by small amounts multiple times a day, according to the complaint. The bank ended the practice in 2011.
U.S. District Judge William Alsup in San Francisco said last year that the bank misrepresented the posting order and overdraft charges and must restore the fees to customers. His original 2010 restitution order was overturned by the panel, which sent the case back to him to redo the damages.
Alsup awarded the same amount of money, saying the deceitful practice was proved at trial.
“We are disappointed with the court’s ruling, and we are considering our options,” a Wells Fargo spokeswoman, Richele Messick, said by e-mail.
The case is Gutierrez v. Wells Fargo, 13-16195, U.S. Court of Appeals for the Ninth Circuit (San Francisco).
To contact the reporter on this story: Karen Gullo in federal court in San Francisco at kgullo@bloomberg.net.
To contact the editors responsible for this story: Michael Hytha at mhytha@bloomberg.net. Charles Carter, Andrew Dunn
Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.
Please enable JavaScript to view the comments powered by Disqus.