4 ms·

Can you produce a source on the "banks have processed transactions in whatever order is most likely to produce an overdraft"?

by cordite 13y ago

ahlatimer 13y ago
Wikipedia article has some sources on it: http://en.wikipedia.org/wiki/Overdraft#Transaction_processing_order http://en.wikipedia.org/wiki/Overdraft#Transaction_processin...
anigbrowl 13y ago
Here's an example: http://consumerist.com/2013/10/22/bank-of-america-stops-overdraft-friendly-practice-of-re-ordering-transactions-from-high-to-low/ http://consumerist.com/2013/10/22/bank-of-america-stops-over... Most big banks have done this for a while and only recently abandoned or are abandoning the practice. I anticipate a large class-ation suit and payout within the next few years, because they took this to wildly abusive levels. For example a few years ago I went out one day and made 2 small (<$10) debit card purchases, passed an ATM of my bank and made a cash deposit, and then made a larger purchase an hour later (which was why I had deposited the cash, as I had a low balance). Chronologically this was all good, but thanks to transaction re-ordering I got hit with $105 in fees (#35 x 3).* I got it reversed, but the sad fact is that for a long time the transactions shown on your account and your available balance were treated as fictions to be re-arranged at the bank's convenience if doing so would yield fee income. * eg for illustration, though I don't remember the specifics: a. starting balance $30 b. debit card -$10 = $20 c. debit card -$10 = $10 d. cash deposit +$60 = $70 e. debit card -$65 = $ 5 Which all looked fine at the time (eg checking recent transactions and available balance at ATM following deposit), but 24 hours later the transactions had been reordered from smallest to largest and my account looked like this: a. starting balance $30 e. debit card -$65 =-$35 A. Overdraft fee! -$35 =-$70 d. cash deposit +$60 =-$10 b. debit card -$10 =-$20 B. Overdraft fee! -$35 =-$55 c. debit card -$10 =-$65 C. Overdraft fee! -$35=-$100 I wish I were making this up, but sadly not. I was just lucky enough to have the smarts and time to go into a branch and browbeat a manager into getting the charges reversed. However, my understanding is that millions of people have been ripped off by this trick in recent years.
- cordite 13y ago
  Most accountants would list numbers and place them in ()'s for negative values. This really breaks my mind when it comes to transactions though, as ALL transactions SHOULD be globally ordered.
tehwebguy 13y ago
It's not the order most likely to produce an overdraft, it's the order that produces the most overdrafts. $500 - $1 - $2 - $3 - $4 - $5 - $1000 sounds like one overdraft but if it's processed in the reverse order it's 6 overdrafts. I did this in that order in college, probably 9 years ago. Obviously the mistake was my fault, but imagine my surprise when I went online to fix it and pay the $35 fee and found that it was over $200. When I called SunTrust they told me that their policy was to process payments from largest to smallest. This was my second overdraft, the first time my card "worked" so I assumed that there was more money in my account than I remembered (wasn't aware of overdrafts at the time).
thefreeman 13y ago
Here's a good one someone linked below http://www.forbes.com/sites/halahtouryalai/2013/06/11/yes-banks-are-reordering-your-transactions-and-charging-overdraft-fees/ http://www.forbes.com/sites/halahtouryalai/2013/06/11/yes-ba...

Can you produce a source on the "banks have processed transactions in whatever order is most likely to produce an overdraft"?

by cordite 13y ago

Can you produce a source on the "banks have processed transactions in whatever order is most likely to produce an overdraft"?

ahlatimer 13y ago

Wikipedia article has some sources on it: http://en.wikipedia.org/wiki/Overdraft#Transaction_processing_order http://en.wikipedia.org/wiki/Overdraft#Transaction_processin...

anigbrowl 13y ago

Here's an example: http://consumerist.com/2013/10/22/bank-of-america-stops-overdraft-friendly-practice-of-re-ordering-transactions-from-high-to-low/ http://consumerist.com/2013/10/22/bank-of-america-stops-over... Most big banks have done this for a while and only recently abandoned or are abandoning the practice. I anticipate a large class-ation suit and payout within the next few years, because they took this to wildly abusive levels. For example a few years ago I went out one day and made 2 small (<$10) debit card purchases, passed an ATM of my bank and made a cash deposit, and then made a larger purchase an hour later (which was why I had deposited the cash, as I had a low balance). Chronologically this was all good, but thanks to transaction re-ordering I got hit with $105 in fees (#35 x 3).* I got it reversed, but the sad fact is that for a long time the transactions shown on your account and your available balance were treated as fictions to be re-arranged at the bank's convenience if doing so would yield fee income. * eg for illustration, though I don't remember the specifics: a. starting balance $30 b. debit card -$10 = $20 c. debit card -$10 = $10 d. cash deposit +$60 = $70 e. debit card -$65 = $ 5 Which all looked fine at the time (eg checking recent transactions and available balance at ATM following deposit), but 24 hours later the transactions had been reordered from smallest to largest and my account looked like this: a. starting balance $30 e. debit card -$65 =-$35 A. Overdraft fee! -$35 =-$70 d. cash deposit +$60 =-$10 b. debit card -$10 =-$20 B. Overdraft fee! -$35 =-$55 c. debit card -$10 =-$65 C. Overdraft fee! -$35=-$100 I wish I were making this up, but sadly not. I was just lucky enough to have the smarts and time to go into a branch and browbeat a manager into getting the charges reversed. However, my understanding is that millions of people have been ripped off by this trick in recent years.

cordite 13y ago
Most accountants would list numbers and place them in ()'s for negative values. This really breaks my mind when it comes to transactions though, as ALL transactions SHOULD be globally ordered.

tehwebguy 13y ago

It's not the order most likely to produce an overdraft, it's the order that produces the most overdrafts. $500 - $1 - $2 - $3 - $4 - $5 - $1000 sounds like one overdraft but if it's processed in the reverse order it's 6 overdrafts. I did this in that order in college, probably 9 years ago. Obviously the mistake was my fault, but imagine my surprise when I went online to fix it and pay the $35 fee and found that it was over $200. When I called SunTrust they told me that their policy was to process payments from largest to smallest. This was my second overdraft, the first time my card "worked" so I assumed that there was more money in my account than I remembered (wasn't aware of overdrafts at the time).

thefreeman 13y ago

Here's a good one someone linked below http://www.forbes.com/sites/halahtouryalai/2013/06/11/yes-banks-are-reordering-your-transactions-and-charging-overdraft-fees/ http://www.forbes.com/sites/halahtouryalai/2013/06/11/yes-ba...