Minnesota-based TCF National Bank is in hot water with the authorities, facing accusations of fraud. The Consumer Financial Protection Bureau has taken action to combat the bank’s questionable overdraft program.
An overdraft fee happens when a person accidentally takes money out of an account that exceeds the amount that is actually in that account — using a debit card to pay for $200 of groceries, for example, when there are only $150 in the account. These fees often run in the realm of $35. However, they’re so common that banks earn quite a lot on them, and one chief executive officer even bought a boat that he named “Overdraft”.
When the financial crisis hit late in the last decade, federal regulations changed. Banks had to get people to enroll in overdraft programs if they were going to charge the fees on ATM withdrawals or debit purchases. These programs were not mandatory.
According to the lawsuit, though, TCF National Bank tried to trick customers into signing up. They simply asked them if they wanted to join the program at the same time other mandatory terms were shown, as they were opening new accounts. These people then assumed the program was also mandatory and signed up. This had such a huge impact that the enrollment rate doubled.
This story shows just how crucial it is to always read the fine print and understand exactly what you’re agreeing to. If you’ve been intentionally misled or deceived, by banks or other corporations, it’s important you know what rights you have. These corporations may have violated regulations and taken advantage of their customers.
Source: Washington Post, “A former bank CEO named his boat ‘Overdraft.’ Now that bank is in hot water over the fees.,” Jonnelle Marte, Jan. 22, 2017