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High-Low is a poker game that I’ve played in the past, but America’s biggest banks have twisted it into a flimflam in which the deck is deliberately stacked against their own customers.
The key to this scam is the fee that bankers assess when your account is overdrawn. Bank of America, Citigroup, Wells Fargo, and others are raking in billions from these fees, and lately they’ve been dealing a joker called “high-to-low” check clearing that takes even more from unsuspecting customers. It works like this: Let’s say you have $200 in your checking account, and you write checks for ten small purchases, totaling $200. Then, at the end of the month, you pay your utility bill of $200. Oops – there’s nothing left in your account to cover that, so you owe a $35 overdraft fee for your mistake.
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But your bank statement arrives a week later, showing $350 in overdraft fees! What happened? A little fast shuffling by your friendly MegaBank.
Rather than processing your checks in the order in which you wrote them, the bank cleared your highest-dollar check first, even though you wrote it last. By cashing the $200 check for your utility bill, the bank totally drained your account. This meant that each of those 10 small checks you wrote earlier were cleverly shifted into overdraft status, forcing you to pay a fee on each of them – thus stinging you for $350 rather than the $35 you really owed.
As one victim said of this finagling, “It’s crooked.”
At least one federal judge agrees, having ordered Wells Fargo to repay $203 million to California customers who were jacked around by the high-to-low scheme, referring to it as “gouging and profiteering.”
Yes, but highly lucrative! Wells Fargo says it will continue to play the high-to-low gouging game while it appeals the judge’s decision.
“‘High to low’ policy generates overdraft fees, consumer anger,” Austin American Statesman, August 22, 2010.