A spokeswoman for Wells Fargo Bank said today the institution will appeal a ruling by a federal judge in San Francisco requiring it to pay California customers $203 million for unfair overdraft fees.
U.S. District Judge William Alsup said in a 90-page ruling Tuesday that the bank manipulated the way it processes overdraft fees in an “unfair and deceptive way” for the purpose of maximizing fees.
Richele Messick, a spokeswoman for San Francisco-based Wells Fargo, said, “We are disappointed with the judge’s ruling.
“We don’t believe the ruling is in line with the facts and we plan to appeal,” Messick said.
Alsup ruled in a class-action lawsuit filed in 2007 on behalf of the bank’s California customers.
Richard Heimann, a lawyer for the customers, said, “These unfair practices cost California consumers huge amounts of money, and we are pleased that the court has ordered Wells Fargo to return $203 million of its ill-gotten gains to its customers.”
Heimann called the decision “a symbolic victory for consumers throughout the country who are subjected to these kinds of oppressive business practices.”
Alsup, who held a two-week nonjury trial on the lawsuit in February, said Wells Fargo engineered its posting of a customer’s debit card purchases each night so that the largest purchase is always counted first.
Many banks use the opposite system, posting the smallest items first, the judge said.
Wells Fargo’s system meant that a customer could have multiple overdrafts, perhaps as many as 10 per day, instead of just one overdraft for the largest item, Alsup said.
The judge also said the bank was deceptive about the practice.
“The bank went to considerable effort to hide these manipulations
while constructing a facade of phony disclosure,” he wrote.
Wells Fargo’s current overdraft fee is $35. Alsup wrote that the bank – the nation’s fourth largest in terms of assets – took in more than $1.4 billion in overdraft penalties in California between 2005 and 2007.