In just 4 days the final rule on overdraft goes into effect for existing customers. After August 15th, you will no longer be assessed any fees if you overdraft your account because of an ATM or debit card transaction, unless you sign up.

But for all of you, who have considered opting into these programs, BEWARE. The new rule did not address the fact that banks often manipulate the order that transactions process (clearing them from highest to lowest) to maximize the number of overdrafts and fees that customers incur. If you opt in, you are not protected from this practice.

We’ve been screaming about this for a long time. We asked the Fed to ban this practice in its rule and it flatly refused. There have been bills introduced in Congress that would address this unfair practice, but they have not yet moved. And the banks’ respond in the same way by claiming that consumers want their transactions approved from high to low to ensure their important bills get paid first. Well think again…

On Tuesday, a district court judge wrote a scathing decision which found that Wells Fargo “acted in bad faith” by clearing transactions in a way which generated more fees and revenue at the expense of depositors. Here are some of the best quotes which do a wonderful job of summing up the decision:

“…this order finds that gouging and profiteering were Wells Fargo’s true motivations…”

“…no credible evidence was presented at trial to support the bank’s argument that high-to-low resequencing was deployed [because] customers wanted or benefitted from it.”

Wells Fargo and other banks always insist that overdrafts are the consumer fault. Consumers need to keep track of their transactions better and be more responsible with their finances. They need to maintain a check register and write down all their transactions. Well this is what the court had to say about that:

“The Court has studied [the Platintiffs] account statements and find that it was impossible for her or anyone else to reconstruct how the bank came up with its number of overdrafts.”

“Even if [the Plaintiff] had meticulously maintained a chronological check register of all her transactions (as Wells Fargo insists that she and other customers should), it could not have accurately reflected or predicted…that she was at risk of incurring four overdraft fees…”

Despite the fact that Wells Fargo has now truly been exposed, with internal memos showing that they gouge their customers, the bank wants to file an appeal. So who knows what’s going to happen with this case. But for now, customers should ignore the solicitations from the bank asking you to opt into overdraft “protection” and go tell your bank to be better than Wells Fargo!! If you want to move your money to a bank that’s better to you, make sure to use our tips.