ISO comment April 5, 2012 3:37 PM   Subscribe

Total longshot: I am looking for an askme comment from several years ago (probably between 2007-2009) where a user said they had been employed as a computer programmer by a big bank, designing a program to re-order transactions so that the bank could maximize its overdraft fees. I have searched high and low and can't find it. Help?
posted by yarly to MetaFilter-Related at 3:37 PM (32 comments total) 3 users marked this as a favorite

This from 2005?
posted by radicarian at 3:44 PM on April 5, 2012 [1 favorite]


Yes!!! Earlier than I had remembered. Thank you!
posted by yarly at 4:08 PM on April 5, 2012


Zero to answer in 7 minutes.
posted by crunchland at 4:37 PM on April 5, 2012 [1 favorite]


Impressive.
posted by yarly at 5:06 PM on April 5, 2012


Everyone hold hands and sway.
posted by The Whelk at 5:17 PM on April 5, 2012 [4 favorites]


Shouldn't we chant? There should be chanting.
posted by deborah at 5:40 PM on April 5, 2012 [3 favorites]


Wow, i had no idea this actually happens. I once accused my bank of doing just this and the rep was so indignant it actually made me sheepish. I feel so vindicated.
posted by sundaydriver at 5:45 PM on April 5, 2012 [6 favorites]


Very simplistic way of putting it, but useful. As weird as it is, thank you for reminding me of this askme.
posted by purephase at 6:09 PM on April 5, 2012


Does anyone read the comments down....what? Oh, no? Okay, thanks.
posted by rtha at 6:35 PM on April 5, 2012


This practice was outlawed a few years back, at least for personal bank accounts. TD, formerly Commerce Bank, did this to me in the range of several thousands of dollars.

I contacted the Florida law firm doing the class action suit, and they were interested in having me as one of the in-person complainants, due to my palpable righteous indignation, in the case that had just been filed. I showed that letter to the TD management and they refunded all my bogus fees.

One of the managers was almost in tears and said he was going to resign if they kept this up. Other than that glitch, I still like TD.

Word of caution, however: the prohibition on this scam does not apply to business accounts. This is why business accounts, that once entailed extra fees, are now free.

There is a credit advance opt-out for debit cards on business accounts, that they don't tell you about, but if you execute that, they can't do this crap.
posted by StickyCarpet at 6:37 PM on April 5, 2012 [13 favorites]


Didn't banks eventually drop that procedure? I seem to remember there being a big hub-bub about it a couple of years ago and then banks switched to just adding more fees to everything.
posted by littlesq at 6:37 PM on April 5, 2012


StickyCarpet just answered my question before I asked it...

Quickest answer yet.
posted by littlesq at 6:39 PM on April 5, 2012 [5 favorites]


then banks switched to just adding more fees to everything.

I'm waiting for the banks to roll out their catchy "Agree to the Fee!" campaign.
posted by Jpfed at 6:46 PM on April 5, 2012


Not outlawed (yet) but some banks have dropped atm overdrafts voluntarily. You also have to opt-in to overdraft "protection" now, if your bank does do it, instead of being automatically enrolled.
posted by yarly at 6:54 PM on April 5, 2012


StickyCarpet just answered my question before I asked it...

Lisa, in this house we OBEY the laws of causality!
posted by Chekhovian at 7:00 PM on April 5, 2012 [4 favorites]


This from 2005?
posted by radicarian

Yes!!! Earlier than I had remembered...
posted by yarly


The 2005 date is really interesting. This practice became widespread only after the 2008 crash. It was like, this bank boat is sinking, I'm taking everyone down with me. Also, the banks were getting all that bail-out affirmation, so what's a few thousand here and there from the little guy, when the whole country is lining up to be shafted big time?
posted by StickyCarpet at 7:06 PM on April 5, 2012


Yes, the CARD Act (2009) outlawed a lot of the nasty stuff surrounding overdraft fees (though not overdraft protection itself, which simply became opt-in instead of opt-out). You can read more at the Consumer Financial Protection Bureau's website (note the section on Overdraft fees).

Incidentally, the passage of the CARD Act has led to a drastic reduction in fees (exact figures noted in link above) which has led banks to new and unseemly methods of extracting fees from their customers--like charging a monthly fee to have a debit card or even on the account itself. Combine this with the proposal to reduce debit card interchange rates and banks were really pissed off for a while there.
posted by librarylis at 8:10 PM on April 5, 2012 [1 favorite]


I'd way rather pay the bank three or four overdraft fees than have someone come after me for 3X the face value of the largest check I bounced that day, which is probably my rent check (CA civil penalty). Of course, I haven't really bounced any checks in 20 years or so, so I guess it's a trivial point.

Way more irritating to me is that debit cards give you a fee when you go negative instead of declining the card at the POS.
posted by BrotherCaine at 8:45 PM on April 5, 2012 [1 favorite]


Way more irritating to me is that debit cards give you a fee when you go negative instead of declining the card at the POS.

Bank of America has recently stopped doing this, unless you are enrolled in Overdraft Protection.
posted by Rock Steady at 8:54 PM on April 5, 2012


I worked for BoA in telephone banking back in 1999 when they introduced this policy. We were all taught to explain it to customers in the same way Medieval Maven did in that thread. It was so obvious to any of us that thought of it that it was a way of cheating customers that I can't believe I read someone parrot the official explanation on Metafilter.
posted by Philosopher Dirtbike at 9:58 PM on April 5, 2012 [2 favorites]


[This used to be the top comment in this discussion but because of its relative lack of worth it has been moved to the bottom. Expect to see it moved further down again later.]
posted by komara at 7:03 AM on April 6, 2012


komara, isn't that reddit (and many other smaller sites) at its core, comment-wise?

Just came in here to say:

1) Joining a credit union was, maybe, the best financial decision I've ever made (though, to be honest, "my good financial decisions" isn't exactly a long list.
2) I love that a question that begins "Total longshot" was answered in 7 minutes.
posted by MCMikeNamara at 8:21 AM on April 6, 2012


[This used to be the top comment in this discussion but because of its relative lack of worth it has been moved to the bottom. Expect to see it moved further down again later.]

OMG look it's lower down now!
posted by rtha at 9:19 AM on April 6, 2012


This practice was outlawed a few years back, at least for personal bank accounts. TD, formerly Commerce Bank, did this to me in the range of several thousands of dollars.


Not true. Some banks have voluntarily abandoned or modified the practice and others settled class-action lawsuits, but there's been no formal ban. The CARD Act only regulated credit cards, not checking accounts. Check re-ordering is alive and well in many locations.

As far as fees for debit, specifically debit overdraft, that's a result of the Federal Reserve's 2009 update to Reg E, which requires consumers to affirmatively opt-in to debit and ATM overdraft. There is no requirement to opt-in for checking and ACH transactions (automatic payments and bill pay, for example). Overdraft fees are still the primary mechanism that funds checking accounts, something which will be even more prominent in the aftermath of the Durbin Amendment (which again had nothing to do with the CARD Act or the CFPB, but was part of Dodd-Frank).
posted by allen.spaulding at 12:04 PM on April 6, 2012


I feel somewhat vindicated now. I was with a bank in 2006 that seemed to be doing this by holding debits for a day or 2 then deducting them from my account all at once, seemingly from gratest to least (listed on my statements in that order, too). I was between jobs, doing odd jobs here and there for money and didn't watch my balance as well as I should have. My fault, but I thought it was pretty scummy of my local bank to maximize their fees in such a way when I did mess up.

After the 2nd time they did that I never stepped foot in their bank again. I'd be embarrassed to say I left the account over-drawn, but it was the result of their last "fee maximization".

If you're in Hawaii or Oregon (or if they have a location near you) I'd recommend Homestreet Bank. My debits have always appeared sufficiently random and they have never given me cause to check on them.
posted by Nauip at 5:36 PM on April 6, 2012


StickyCarpet: The 2005 date is really interesting. This practice became widespread only after the 2008 crash.

A programmer coworker was talking about having written algorithms to do exactly what the 2005 post was talking about, back in the 2001 to 2002 timeframe. It's been so long now that I'm not sure if I didn't ask him what bank it was, or if he couldn't tell me. He had lots of stories about the shitty ways they tried to extract the most cash possible from their customers.

You may be completely right about it not being widespread, but at least some banks were definitely doing it as long as ten years ago.
posted by Malor at 11:19 AM on April 7, 2012


FWIW I really don't think that there is anything inherently wrong in paying your largest bills first, as long as they are crediting first and then debiting. I am amused by Philosopher Dirtbike's comment, if only b/c I was working in a call center that was actually in the same building as everyone else - so I could and did physically see and speak with the people who ran the deposits, the people who were investigating your weirdass debitcard transactions, the people who found your 7 year old check copies, and all that crap. So I know, for a fact, that the (largely) women who were in deposits were actually running credits before the system ran incoming debits, and I know it was policy to run the largest debits (ACHs, anyway, and checks) before the small transactions.

So, FWIW, I wasn't "parroting" anything, and hi! I'm around! Just because someone explains why something happens and you don't agree with it doesn't mean that person is stupid! BofA, as I say a couple comments later, might have actually been conducting itself in an assholish manner - I don't know, I didn't work there. I just know the policies of the place I *did* work, which for the record had its own problems.
posted by Medieval Maven at 5:50 PM on April 7, 2012


FWIW I really don't think that there is anything inherently wrong in paying your largest bills first, as long as they are crediting first and then debiting

Banks often insist that this happens to be the most consumer-friendly method for a significant segment of the population. Your largest bills are often your most important: rent/mortgage, utilities, credit cards, phone, etc. The cost of having one of those bills bounce can be high - utility shut-off fees are often higher than overdraft. That said, the act of spreading this out over a multi-day period (which Wells Fargo, among others, did) is pretty indefensible as it makes it nearly impossible for consumers to manage their accounts and stay out of trouble.
posted by allen.spaulding at 6:45 PM on April 7, 2012


By definiton you should be paying the transactions that come in *that day.* The things that really resulted in a lot of overdrafts, in my experience were either:

1) Definitely not managing money and keeping track of transactions
2) Debit card holds.

Of the two, debit card holds were really worse than anything else. The idea that somehow it's okay to authorize large amounts of money MORE THAN ONCE and then no one but the merchant can authorize the release of the hold . .that was an issue we had to deal with all the time. And clearly, since now at car rental places they tell you more or less, DO NOT USE YOUR DEBIT CARD, it's an ongoing thing. I don't understand - and never got a really satisfactory explanation of why - why this is allowed. I mean, I get it - the merchant gave you a big expensive whatsit and they want to make sure they have your money - but I'm just unclear on why the system is so STUPID in this day and age as to authorize twice, not really put the transaction through, all the other weird stuff that they STILL DO.
posted by Medieval Maven at 7:03 PM on April 7, 2012

This practice was outlawed a few years back, at least for personal bank accounts. TD, formerly Commerce Bank, did this to me in the range of several thousands of dollars.
US Bank did this to me back in the day. Now I have overdraft "protection" turned off on all my bank accounts, thanks to the new consumer protection stuff in the financial reform bill (which otherwise sucked). Elizabeth Warren was one of the main architects of that policy.
posted by delmoi at 5:59 AM on April 10, 2012

Banks often insist that this happens to be the most consumer-friendly method for a significant segment of the population. Your largest bills are often your most important: rent/mortgage, utilities, credit cards, phone, etc. The cost of having one of those bills bounce can be high - utility shut-off fees are often higher than overdraft.
Sure, but if they were really worried about the customer they could have, you know not re-ordered transactions to fuck you the hardest. They could have charged one fee for the entire day, or they could have just not charged you any money unless you were over-drafted for a month. Overdraft protection doesn't really cost them anything, it wouldn't cost them any more then any other loan.

The purpose was to make money, for them. They actually bragged to shareholders about how much cash they were raking in doing this, billions of dollars a year for large banks (like BoA)

The overdraft fees were about making money.
posted by delmoi at 6:03 AM on April 10, 2012 [1 favorite]

The 2005 date is really interesting. This practice became widespread only after the 2008 crash. It was like, this bank boat is sinking, I'm taking everyone down with me. Also, the banks were getting all that bail-out affirmation, so what's a few thousand here and there from the little guy, when the whole country is lining up to be shafted big time?
No, they'd been doing it for years it's just that in 2008 people started actually looking more closely at this and asking WTF?! It didn't help that banks were bragging to shareholders how much they were making in overdraft fees (I'm guessing the crash probably brought in a lot of them, as well)

The other think was, like I said Elizabeth Warren. It's really amazing how completely out of touch a lot of senators and congress people are with how things are for most people in society. Warren actually studied this stuff as an academic, so she was more aware of what was going on, and where the problems were.
posted by delmoi at 6:07 AM on April 10, 2012


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