I will state the facts first and after I will make my rant. The facts are sort of technical but worth following so that you can understand this scam. This practice by Citizens is definitely unethical. It involves one of there checking accounts. I know that all the large banks have policies that maximize their fees but I think this is probably as unique as it is disgusting.
Here we go:
On 2/7/08 my online statement shows the following.
1/30 Balance $76.87
1/31 Debit $20.00
1/31 Debit $16.38
1/31 Debit $14.00
1/31 Debit $11.43
This leaves a balance of $15.05 showing as available on 1/31/08
2/01 Insufficient Funds Fee $117.00
2/01 Debit $40.68
This leaves a negative balance of $142.63 showing for the date of 2/01
2/04 Insufficient Funds Fee $39.00.
This leaves the account negative $181.63. This is everything up to date and there are no pending transactions on this account.
I called Citizens customer service and confirmed that they calculated the fees in the following manner.
This is the quick and simple explanation. The amount of $40.68 was pending but withdrawn from my available balance before the date that it actually posted on the 2/01. I was charged 3 fees for going over my available balance. The next day I was charged a fee again when one of the original transactions that was used to calculate me as over the balance cleared. They used the $40.68 to calculate me as over the balance and they used it again latter to add another fee. Essentially they charged me two fees on this transaction and on this transaction alone. They would probably argue that my fee was on another one of my transactions but I don't think the small claims judge is going to see it this way.
I also use BankNorth. They withdraw fees in a similar manner but there policies would have resulted in only one fee because they charge fees for the most part on the payment post date. I am not advocating BankNorth by any means. They have policies that make there fees nothing more than high interest loans in disguise (I'll elaborate more on that in my rant) as well.
Here is some more technical info. Skip it if you already understand how this works.
Citizens and other banks deduct from larger amounts to lesser amounts from your balance in determining your fees.
For example. Lets say you have $40.00 in you account. You go out the same day and make two debits for $2.50 each another for $5.00 and one more debit at $35.00. Your will typically incur 2 fees. It does not make a difference the order you made these transactions. Even if all these transactions post on the same day they do not do you the favor of letting the three smaller debits get deducted first. If they did they would only be able to collect 1 fee from you.
Why do banks do this besides the obvious. If you ask them they might tell you they took a survey and people said they want it this way so that bigger bills are sure to get payed. Bigger bills like your mortgage tend to be more important. The big lie behind this is that more often than not you are only overdrawn by a small amount and the bank will honor all the transactions anyway (usually up to a couple of hundred dollars).in essence loaning you the money. There are laws governing loans but nobody seems to care. They disguise the loan in the language of fees. I am sure the interest rates on these loans have been in the thousands. There should be a class action lawsuit for not disclosing interest rates. A loan is a loan no matter what you call it.
A little aside. I checked my balance on the 1/30 and it showed a sufficient available balance for the $40.68 I charged at that time. Available balance means available after all the electronic transactions have found there way to them and they care to acknowledge them. I think I forgot about a gas charge. They sometimes show up much latter. I made a mistake and fees may be in order but there extraordinary fee policy should be pointed out.
I am switching everything over to my little credit union. Even Banknorth is better than Citizens.
Disclaimer: This info is to the best of my knowledge and may be in error.
(Wouldn't want a slander lawsuit if I was off on something) (Jerks!)
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