Illinois Teen Learns About Bank Fees the Hard Way

[mongers]

I even get phonecalls from my bank to warn me if an account is running low.

That is a cool service.

I had a credit card link to a phone and it sent real-time text messages for each and every transaction on the card; rather useful.

[derspiess]

I'm also not sure how clearly banks lay out their terms and conditions.  Better than the software or cell phone boilerplate, but still probably a bit obscure to the average person, especially if it's been a while since you opened the account.

The information on minimum balances and monthly fees is about as opaque as the instructions on a coin operated laundry machine.

Yeah they do typically put it in the brochures they give you when you open an account. I even remember discussing it with a couple bankers.

They're required to do so, per multiple federal regulations.  Plus most (if not all) places have an easy to read comparison chart listing all fees & requirements for their different account products.

[Ed Anger]

I'm also not sure how clearly banks lay out their terms and conditions.  Better than the software or cell phone boilerplate, but still probably a bit obscure to the average person, especially if it's been a while since you opened the account.

The information on minimum balances and monthly fees is about as opaque as the instructions on a coin operated laundry machine.

Yeah they do typically put it in the brochures they give you when you open an account. I even remember discussing it with a couple bankers.

They're required to do so, per multiple federal regulations.  Plus most (if not all) places have an easy to read comparison chart listing all fees & requirements for their different account products.

Which is why I loathe lazy cunt mom.

[garbon]

I'm also not sure how clearly banks lay out their terms and conditions.  Better than the software or cell phone boilerplate, but still probably a bit obscure to the average person, especially if it's been a while since you opened the account.

The information on minimum balances and monthly fees is about as opaque as the instructions on a coin operated laundry machine.

Yeah they do typically put it in the brochures they give you when you open an account. I even remember discussing it with a couple bankers.

They're required to do so, per multiple federal regulations.  Plus most (if not all) places have an easy to read comparison chart listing all fees & requirements for their different account products.

Which is why I loathe lazy cunt mom.

He wasn't a small child - he was 18! If he can't be bothered to pay attention to the materials he received when opening the account...!

[Ed Anger]

I blame her. She nagged him, she takes the blame.

[garbon]

I blame her. She nagged him, she takes the blame.

He's technically a man. If he hasn't figured out by that age how to combat his mother - fault is on him.

[mongers]

I'm also not sure how clearly banks lay out their terms and conditions.  Better than the software or cell phone boilerplate, but still probably a bit obscure to the average person, especially if it's been a while since you opened the account.

The information on minimum balances and monthly fees is about as opaque as the instructions on a coin operated laundry machine.

Yeah they do typically put it in the brochures they give you when you open an account. I even remember discussing it with a couple bankers.

They're required to do so, per multiple federal regulations.  Plus most (if not all) places have an easy to read comparison chart listing all fees & requirements for their different account products.

Which is why I loathe lazy cunt mom.

He wasn't a small child - he was 18! If he can't be bothered to pay attention to the materials he received when opening the account...!

Maybe he isn't a bright as you were at that age, but he still wants to be a functional member of society ?

[derspiess]

Yeah, I thought about usury laws as well, but ultimately that's not really the wrong being done.  The wrong being done is to lay out a trap for a client, and hope he falls in it. 

I don't think that happens as often as you think it does.  Banks that try to live off of that type of fee income do not last very long. 

And if banks couldn't charge these fees, you'd see a lot of low-income people being shut out of banking altogether.  They're a risk to the bank, and fees help mitigate that risk.

[Malthus]

In Canada at least, there exists a criminal rate of interest - that is, interest on a loan cannot total more than a certain percentage.

Short-term "payday" loan outfits got hammered by the courts in class actions for using fees and charges to effectively raise the loan rate higher than this "criminal' rate.

I dunno why the same analysis cannot apply to overdraft fees. The bank is essentially loaning you the money. Why should it be able to charge you more than the principal per day, and call it a "charge" rather than "interest"?

Yeah, I thought about usury laws as well, but ultimately that's not really the wrong being done.  The wrong being done is to lay out a trap for a client, and hope he falls in it. 

I'm really dismayed that majority of posters don't have an issue with that.  Just because it takes carelessness to fall into a trap doesn't mean that it's fine for the trap to exist, or that it's even legal.  Good faith in conducting business means something.

Another way to look at it is that generally speaking under the common law "penalty provisions" that are not "genuine pre-estimates of liquidated damages" are not enforcable. Here's a short article on that:

http://www.tresscox.com.au/resources/resource.asp?id=128

If that applies to overdraft charges and the like ...

[DGuller]

And if banks couldn't charge these fees, you'd see a lot of low-income people being shut out of banking altogether.  They're a risk to the bank, and fees help mitigate that risk.

Seems like a bit of an over-mitigation to me.

[DGuller]

I'm really dismayed that majority of posters don't have an issue with that.  Just because it takes carelessness to fall into a trap doesn't mean that it's fine for the trap to exist, or that it's even legal.  Good faith in conducting business means something.

Which is one of the areas where the Anglo-American school of business seems to be failing in.

I wouldn't necessarily say that.  Bad faith can and does get punished or rebuffed in courts all the time, AFAIK.  I also wouldn't assume that the bank in question is in the clear charging $28 per day for 14 days for overdrafts.

[garbon]

Maybe he isn't a bright as you were at that age, but he still wants to be a functional member of society ?

Then he read the terms on the brochure. I'm not saying he has to read the legal jargon. As D said, many major banks call out the fees in a table.

[dps]

I agree that people should be responsible for understanding the minimum balance requirements on their bank accounts, and also the service charges that can apply--and if you don't, it's your fault--but IMO there's no justification for maintenance fees on low account balances in the first place--it costs a bank essentially nothing to keep an account open.  And I agree that charging an overdraft fee on an account that's only overdraft because of a maintenance fee is abominable.

It was especially bad in this case because it wasn't just a monthly overdraft fee, or a one-time charge, but a daily fee.  There's no excuse for that.

[Josquius]

This is pretty shocking.
Sure, they should have read the terms, they're lazy idiots, etc....
But the bank should not have been allowed to screw them over quite this much.

[Malthus]

I agree that people should be responsible for understanding the minimum balance requirements on their bank accounts, and also the service charges that can apply--and if you don't, it's your fault--but IMO there's no justification for maintenance fees on low account balances in the first place--it costs a bank essentially nothing to keep an account open.  And I agree that charging an overdraft fee on an account that's only overdraft because of a maintenance fee is abominable.

It was especially bad in this case because it wasn't just a monthly overdraft fee, or a one-time charge, but a daily fee.  There's no excuse for that.

I agree - the issue is not that the guy did not understand the fees, but that the fees have no legitimate function.

In the legal jargon, in this jurisdiction they are unenforcable penalties, not "genuine liquidated damages" (which is just a fancy way of saying they are a fine to punish people who have overdrafts and provide profits to the bank, not a realistic pre-estimate of what the breach of the agreement - by having an overdraft - actually costs the bank).