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Overdraft fees still hitting consumers when they least expect it

THE FIXER HAS SAVED YOU

$1,221,109

Updated: June 7, 2012 8:24AM



Dear Readers: The Fixer recently had a nice chat with Edward E., a longtime reader of this column who was in a real fix. A company he had never done business with somehow got hold of his debit card number and took $100 out of his account.

That would have been bad enough, but Edward’s account was a bit low on money. When that incorrect $100 debit hit, it sent his account into the red and triggered a $40 overdraft fee from his bank.

While his bank quickly disputed the original $100 debit and put that money back into Edward’s account, it balked at waiving the $40 overdraft fee. Only after Edward continued to complain did the bank finally agree to refund the fee. (Edward is giving it a couple days for the refund to appear, and if it doesn’t he’s calling in The Fixer.)

Though Edward was exceptionally unlucky, he is far from the only consumer still being hit with huge overdraft fees, even after a change in Federal Reserve rules in August 2010 made it harder for banks to charge these fees to consumers. A survey released last week by the Pew Charitable Trusts found that many consumers don’t understand their rights and don’t know how to avoid overdraft fees.

Before the change in the banking rules, banks were free to rearrange the order of pending transactions on a customer’s account to cause the maximum number of “bounced” transactions and a huge number of fees. Team Fixer used to regularly hear from consumers who’d dipped into the red at the start of a long weekend and on Monday morning wound up with hundreds of dollars in overdraft penalties on relatively small transactions.

Now, banks can’t charge you any overdraft fees unless you’ve opted in for overdraft protection. If you don’t opt in, you might have an embarrassing denial of your debit card at the store, but you won’t pay a fee.

The Pew report found that more than half of the people who got overdraft fees didn’t believe they had opted in for overdraft coverage. And 75 percent of respondents said they’d rather have a transaction declined than pay an overdraft fee.

If you are unsure about whether you’ve opted in for these fees, now might be a good time to ask your bank. For the full report, go to pewtrusts.org.

Shred it and forget it

The annual “Shred It and Forget It” event runs from 9 a.m. to 2 p.m. June 23 at the United Center, parking lot E. Participants may bring up to 10 boxes of old, unwanted personal and financial documents, which will be shredded on the spot. Organizers also will accept old or broken TVs, monitors, laptops, PCs, servers, data storage devices, printers, fax/copy machines, cell phones, VCRs, DVD players, video cameras and game consoles for recycling and safe disposal.

COSTLY LESSON: Consumer’s tale of woe

Michelle of Streamwood is not one to get ripped off while traveling, which is why she used an online “name-your-own-price” bidding service to make sure her hotel stay was within her budget.

“I thought I was getting a pretty good deal, but when I called the hotel to request a room with two double beds, they told me this was an upgrade and would cost extra,” Michelle wrote The Fixer. “In addition, when I got there, I discovered an additional $15-per-day parking charge for my rental car.”

Michelle says she never saw any disclosure about this when the price she offered was accepted. And when she complained to the online service, they refused to help.

They had little incentive, as her credit card was charged for the entire stay the moment she booked the room.

What is a Costly Lesson? It’s an UNFIXABLE problem that cost someone a lot of money but holds a valuable lesson for the rest of us. If you’ve got something to warn the rest of us about, e-mail it to szimmermann@suntimes.com with Costly Lessons in the subject line. And don’t worry — with Costly Lessons, we leave out last names to prevent further embarrassment.

Getting the runaround over a consumer problem? Tell it to The Fixer at suntimes.com/fixer , where you’ll find a simple form to fill out. You’ll also find a list of consumer contacts and tips. Because of the large volume of submissions, The Fixer can’t personally reply to every problem. Letters are edited for length and clarity.



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