Wells Fargo was ordered to pay more than $200 million in restitution to California customers for manipulating and multiplying overdraft fees, a federal judge has ruled.
U.S. District Court Judge William Alsup of Northern California, in his 90-page ruling Tuesday, said Wells Fargo used "a bookkeeping device" that turned one instance of overdrawing an account into as many as 10, allowing the bank to multiply the number of fees it could collect from a single mistake.
"The bank went to considerable effort to hide these manipulations while constructing a facade of phony disclosure," he said.
The ruling said Wells Fargo (WFC, Fortune 500) must pay $203 million in restitution to California customers for its liberal use of $35 overdraft fees. This is a fraction of the $1.8 billion in overdraft fees that the bank collected in California from 2005 to 2007, according to the court.
"The revenue generated from these fees has been massive," wrote the judge.
Wednesday, August 11, 2010
Wells Fargo deliberately manipulated overdraft fees, ordered to pay $200 million.