Issue: Misleading customers on charging of overdraft fees
Court Finds Wells Fargo Misled Customers in Wells Fargo Lawsuit Over Overdraft Fees
2016 Case Update
On April 4, 2016, the U.S. Supreme Court declined Wells Fargo’s request to review its 2010 loss at trial, where U.S. District Court Judge William Alsup entered a $203 million judgment against the bank for manipulating debit card purchases to maximize its overdraft fee revenue in violation of California state law. The April 4, 2016 decision ends the Bank’s efforts to escape judgment.
The Wells Fargo Bank Overdraft Case
In August 2010, U.S. District Court Judge William Alsup issued a 90-page opinion in the case of Gutierrez v. Wells Fargo Bank finding that Wells Fargo manipulated its processing of customer debit card purchases by its California customers to maximize overdraft fees in violation of California state law. Instead of posting transaction chronologically, Wells Fargo deducted the largest charges first, drawing down available balances more rapidly and triggering a higher volume of overdraft fees. Judge Alsup ordered that Wells Fargo return to its customers approximately $203 million in restitution and enjoined the abusive accounting practices.
Judge Alsup’s decision followed two and a half years of extended litigation that culminated in a two-week bench trial which ended in May 2010. The judgment against Wells Fargo constituted the 4th largest judgment in California in 2010, and the largest judgment in a class action lawsuit.
The case before Judge Alsup was brought on behalf of California Wells Fargo customers who, from November 15, 2004 to June 30, 2008, incurred overdraft fees on debit card transactions as a result of the bank’s practice of sequencing transactions from highest to lowest. If you are a member of this Class, you do not need to take any action at this time to remain a member of the class.
2014: California Appellate Court Affirms Judgment for the Plaintiffs
In September 2010, Wells Fargo filed an appeal with the Ninth Circuit Court of Appeals. In December 2012, the appellate court issued an opinion upholding and reversing portions of Judge Alsup’s order, and remanded the case to the district court for further proceedings.
On May 14, 2013, Judge Alsup reinstated the $203 million judgment against Wells Fargo. Wells Fargo again appealed.
On October 29, 2014, the appellate court affirmed Judge Aslup’s decision reinstating the $203 million judgment. Commenting on the decision, Lieff Cabraser attorney Michael W. Sobol stated, “For seven years, Wells Fargo has sought to defend its misrepresentations as to how it imposed overdraft fees on debit card purchases – all for the purpose of boosting its bottom line. Over one million California consumers are entitled to relief. They should not have to wait any longer for Wells Fargo to return their money.”
Federal Court Bank Overdraft Fees Multi-District Litigation
Lieff Cabraser also serves on the plaintiffs’ executive committee in a multi-district litigation action before U.S. District Court Judge James Lawrence King in Miami, Florida, against the nation’s major banks for the same fraudulent overdraft practices.