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Wells Fargo to cough up $200 million in ‘overdraft-fee’ case

wells-fargoA federal judge in California on Tuesday told Wells Fargo & Co. to cough up in excess of $200 million to reimburse customers who the judge declared were inadequately charged millions in overdraft fees by posting transactions in an order that would generate more fees—a practice many big banks have used for years. Overdraft fees are fees charged to customers who run a negative account balance in their bank accounts and the Federal Reserve recently issued new rules that will curb banks' ability to charge the fees.

Judge William Alsup, in the class-action ruling in federal court in San Francisco, said the bank’s processing method was designed to generate more fees. Wells however said it puts through customer’s checks for larger amounts first because it’s often their more important payments covering a mortgage or auto loan.

Richele Messick, a Wells Fargo spokeswoman said that, “We plan to appeal. We don’t believe the ruling is in line with the facts of the case. We are disappointed with the judge’s ruling. We believe Wells Fargo’s method of processing transactions has been appropriate and consistent with the customers’ interests and the laws and rules of governing regulatory bodies.”

According to Reuters, Wells Fargo announced that it is "disappointed" with the verdict and will file a petition.

Banks' systems in charging overdraft fees, which produce around $40 billion a year for the banking sector, have at the center of customers’ issues against banks since the beginning of the financial calamity three years ago. To charge elevated sums, banks used a variety of methods in handling customers' accounts. In a majority instances, banks altered customers' transactions at the conclusion of the day, first deducting the biggestr purchases from the account's balance.