Consumer Rights Regarding Bank Fees
Consumers are charged millions of dollars each year for bank fees such as overdraft fees, bank service fees, EFT fees and ATM fees. Many consumers remain unaware of these fees for days until they review their bank statements. Learn what the fees are, when banks are allowed to charge them, and what the consumer laws are with respect to bank fees.
Below you will find information about the most common bank fees:
Bank service fees
Bank service fees include monthly service charges and maintenance fees that are automatically withdrawn from your account. Ask your bank what fees they charge on their accounts. Even if they claim to offer “free checking,” they often have hidden fees that are not clearly disclosed. Make sure they won’t start charging a bank fee after a certain period of time or if they are minimum balance conditions.
Automated Teller Machine fees are charged to a customer when they use their ATM/DEBIT card to withdraw funds from an ATM machine that does not belong to the financial institution they bank with. The Electronic Funds Transfer Act (EFTA) made it a law for banks and other businesses providing ATM services to notify customers of the charge if an ATM transaction occurs. The act requires that the fee details must be on the ATM screen or in plain sight so that the customer can be made aware of the fee prior to withdrawing money.
Most financial institutions will charge non-banking customers an average of $2 to $3 for each ATM transaction. The customer’s own bank may also charge an additional fee to process the transaction. If you believe that you have been charged an ATM fee or other fees associated with financial transactions in error, contact a financial consumer protection lawyer who is familiar with the EFTA and can advise you of your rights.
Electronic Funds Transfers are most commonly associated with electronic-checks and debit card charges. If you pay a bill over the phone and the company asks for a check number, they will most likely deduct the money in the form of an e-check, or electronic check. Likewise, if you purchase something online or over the phone using a debit card, the seller may charge additional fees but must get your consent first. This happens often with cellular providers and credit card companies as well. Although sometimes a provider or bank must have your written permission prior to authorizing the EFT, they often do not require this. Your bank may also charge bank fees to process the transaction, thus subjecting you to possible overdraft fees if you are not aware of these possible charges.
An overdraft fee is what a bank charges you when you spend more than you have in your account. In fact, overdraft fees are often listed as “NSF” (non-sufficient funds) charges on the bank statements. When you open an account, the bank is required to explain what their overdraft fees will be and when they will apply. In most cases, banks charge an average of $35 for each overdraft fee. You must sign a form allowing for these charges to be placed on your account if necessary.
If you think you have been charged overdraft fees unfairly, contact a consumer protection attorney who can help you find out if your rights were violated.
How do overdraft fees affect my account?
Once a bill is returned to the bill collector for NSF, you will get an overdraft charge. This will be automatically deducted from the balance of your bank account, reducing your available balance by that amount. Unfortunately, most consumers aren’t aware that the charge has occurred and spend according to what they thought they had prior to the overdraft charge.
This can trigger an expensive cycle. Banks will notify you of the overdraft charge by mail within a few days. But by that time, the damage may already be done. Just one fee could set off a chain of other overdraft fees. Because banks automatically take these charges out of your account, it can be difficult getting them reversed.
What can I do to protect myself from overdraft fees?
The federal government has received thousands of bank complaints from customers who believe banks have violated their consumer law rights. A consumer lawyer will correct any errors that the bank may have made and ensure your money gets returned to you and that you get compensated if there were any violations. However, there are things that consumers can do to prevent these overdraft fees from occurring.
Here are some recommendations from the Federal Reserve Board:
• Know your account balance! –Many people have no idea how much money they have in their accounts. They swipe their debit card repeatedly each day and never log one receipt. If you keep the running account balance in your head, you are setting yourself up for disaster. Record every transaction, weekly if not daily. Make sure that your bank account balance corresponds with your bank statement. Search for the errors and see if there are charges from your bank or other parties that do not belong there so that you can register the appropriate bank complaints.
• Keep track of electronic transactions - Electronic transactions are common. Gas stations, grocery stores, movie theaters and online venders will all accept debit card payments. Automated payments like car loans and insurance are also easy to forget. These must be recorded as they add up quickly. Also, some companies may charge an additional fee above and beyond the purchase price to process a transaction. Be aware of every penny that is deducted from your account.
• Check your balance often – There is no excuse for not knowing how much money you have. You can go online, link to your bank website from your mobile device, or even call a toll-free number and find out what your exact balance is. Never spend it unless you are sure it is in there. And always remember to count any outstanding checks you may have written.
• Read your statements – Banks will provide you with a monthly statement, either in printed form or electronically. Compare these to your records for hidden fees. Banks may raise their fees without your knowledge. Make sure that you take a few moments each month to review your statement. If there are discrepancies, contact the bank right away. If they are unable or unwilling to help you, hire an experienced consumer lawyer to help you get your money back.
In addition to the tips above, ask your bank if they offer overdraft protection. Overdraft protection prevents your account from being overdrawn by pulling funds from a credit card or savings account.
The Electronic Fund Transfer Act (EFTA) in a nutshell:
This act provides protection for consumers engaged in financial transactions with banks or other companies by regulating the transaction fees that these institutions can charge. It applies to financial transactions made via debit cards, ATMs, credit cards and other automated methods. The EFTA regulates and monitors overdraft fees as well. It ensures that financial institutions comply with laws requiring clear notification of fees. The EFTA also gives consumers certain rights when they file complaints against financial institutions. Punishment for violating the EFTA can include reversal of charges and penalties up to $1,000, in addition to legal fees.
Banks are in the business of making money. They provide invaluable services, but can also take advantage of you if you don’t know your consumer law rights and how to protect yourself from potential bank complaints. Don’t let banks intimidate you. Know your rights, know your account balance, and if you find yourself in a battle with a bank for charges you don’t owe, hire a skilled consumer lawyer to fight for you.
Last Modified: Wednesday, May 29, 2013