August 16, 2010
Northern District court judge, William Alsup explains Wells Fargo’s high-to-low check posting – a practice the bank expected would generate $40 million in revenue:
Assume that a customer has $100 in his account and uses his debit card to buy ten small items totaling $99 followed by one large item for $100, all of which are presented to the bank for payment on the same business day. Using a low-to-high posting order, there would be only be one overdraft – the one triggered by the $100 purchase. Using high-to-low resequencing, however, there would be ten overdrafts-because the largest $100 item would be posted first and thus would use up the balance as quickly as possible.
The court found the only motives behind the challenged practices were gouging and profiteering and ordered Wells Fargo to cease its practice of posting in high-to-low order for all debit-card transactions for all class members.
Wells Fargo says it will appeal.
See the opinion on Westlaw: Gutierrez v. Wells Fargo Bank, N.A., 2010 WL 3155934
On Westlaw Next: Gutierrez v. Wells Fargo Bank, N.A., 2010 WL 3155934
See news articles about the decision:
SEARCH: “Wells Fargo” & overdraft & da(aft 8/9/2010)