Wells Fargo & Company and Wells Fargo Bank, NA violate Federal Reserve Regulation E, says the complaint for this class action. What is Reg E? It sets forth requirements that banks must meet before charging customers overdraft fees on one-time debit card or ATM transactions. The complaint alleges that Wells Fargo’s disclosures are ambiguous and also violate California’s Unfair Competition Law (UCL).
The complaint says that “before financial institutions are permitted to charge overdraft fees for one-time debit card and ATM transactions,” they must do a number of things:
- “[T]hey must provide a complete, accurate, clear, and easily understandable disclosure document of their overdraft services[,]” that is, an opt-in disclosure agreement.
- “[T]hey must provide that disclosure as a stand-alone document not intertwined with other disclosures[.]”
- “[T]hey must obtain verifiable agreement (affirmative consent) of a customer’s agreement to opt-in to the financial institution’s overdraft program.”
Wells Fargo’s disclosure document is entitled, “What You Need to Know About Overdrafts and Overdraft Fees.” But the complaint alleges that this document offers “ambiguous and misleading language” to tell customers when Wells Fargo will impose the fee.
What’s the problem? The complaint claims that what Wells Fargo does, and what it does not disclose to its customers, is that it uses “an internal artificial account balance” to determine whether a transaction overdraws an account, instead of the actual account balance known to the customer. The complaint is at pains to say that it is not arguing with Wells Fargo’s particular method of determining the account balance, only with its unclear disclosure of method.
Because of this, the complaint says that Wells Fargo’s charging of overdraft fees, and its use of an ambiguous document for customer opt-in, are illegal.
A previous case brought suit against Wells Fargo for misrepresentations about how it determined overdrafts. In that case, the bank had been using a particular order of processing to increase the number of customer overdrafts. A court of appeals affirmed a $203 million judgment against Wells Fargo in that case and let stand an injunction that forbid the bank from making any other misrepresentations about the processing of transactions and the determination of overdrafts. The complaint charges that Wells Fargo is once again “fail[ing] to accurately describe its overdraft services” to comply with Reg E.
Two classes have been defined for this class action.
- The Regulation E Class is all current and former California customers of Wells Fargo who were charged an overdraft fee on a one-time debit card or ATM transaction, between November 25, 2019 and the date the class in this action is certified.
- The UCL Section 17200 Class is all current and former California customers of Wells Fargo who were charged an overdraft fee on a one-time debit card or ATM transaction, between November 25, 2016 and the date the class in this action is certified.