A Visual Guide to How Banks Commit ‘Transaction Infraction’

NEW YORK (MainStreet) — Wells Fargo (Stock Quote: WFC) lost a court case last year after a federal judge in California decided the bank’s policies of processing checks, debit card transactions and bill payments from the highest dollar amount to the lowest instead of chronologically qualifies as "unfair and deceptive business practices" since it leads to customers paying multiple overdraft fees.

To show just how the process helps banks charge consumers excessive fees, Pew Research put together an interactive graphic illustrating how “transaction infraction” (Pew’s term for the reordering) can cost consumers more in the long run.

According to the graphic, the plaintiff in the Wells Fargo case would have been charged one $22 overdraft fee if the transactions had been processed in the order they were made. Instead, the consumer was charged four separate overdraft fees when the transactions were processed from the highest to lowest amount, leading to a total of $88 in additional overdraft charges.

The judge ultimately ordered Wells Fargo to pay consumers a total of $203 million, and starting in May, the bank was ordered to process charges either in the order they occur or from lowest to highest to ensure extra fees aren’t levied on the consumer. Pew suggests customers check with their banks to see how they will process charges, though, since no law is in place stating they have to do it in any particular order.

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