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Banks P*#s Off Their Customers


There’s a practice in banking known as “high-to-low” check clearing, in which larger check and debit-card payments are made before smaller ones. About 25% of banks in the USA utilize this tactic. The resulting overdraft fees provide significant revenue for banks.

Many bank customers incur overdraft fees because they, incorrectly, assume banks process transactions in the order they occur. Kind of like how you’d enter them into your check book ledger. Not the case.

Here in Minneapolis TCF Bank has found itself in legal hot water with a lawsuit filed by a customer. The suit claims the customer was charged “thousands of dollars” of unnecessary overdraft fees as a result of the “re-ordering” practice by the bank.

TCF’s goal is “to be the most convenient bank in the markets we serve”, may wish to deliver on that promise. There are at least 30 similar suits filed across the country. Last month a judge ruled that Wells Fargo pay $203 million back to its customers in California. Not a good sign if you’re a banker.

In this case banks, like airlines, have looked to “creative” ways to generate revenue. Charging for checked bags, snacks, etc. were the brainstorms the airlines came up with. Whenever these concepts are counter-intuitive to customers – there’s a problem brewing.

In TCF Bank’s case this is an opportunity to create customer loyalty and promote their goal of  “convenience” by turning this negative customer experience into something more forthcoming than a lawsuit.

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