Bank customers fighting high overdraft fees got a boost on Tuesday with a win in federal court in California against Wells Fargo, but that case has limited legal impact.

A similar federal court case filed in Florida against 30 banks including Wells Fargo, Bank of America, Citibank and others could mean much more.

At issue is the practice of banks processing debit payments according to their size, from largest to smallest, rather than by the timing of which transaction came first. This drains customer bank accounts faster, causing them to pay more overdraft fees.

In the California decision, U.S. District Judge William Alsup accused Wells Fargo of "profiteering" by changing its policies to process checks, debit card transactions and bill payments from the highest dollar amount to the lowest. He referred to the practice as "gouging and profiteering."

Alsup ordered Wells Fargo to stop posting transactions in high-to-low order by Nov. 30 and to reverse overdraft fees charged to customers over a period of several years. The cost to the bank is estimated at about $203 million.

Wells Fargo spokeswoman Richele Messick said the bank will appeal the ruling.

Judge Alsup's ruling won't have sweeping legal implications because it was limited to a group of Wells Fargo customers in California, said Charles Delbaum, a senior staff attorney for the National Consumer Law Center.

The case in Florida, however, making similar allegations against 30 banks from plaintiffs in 14 states will have more impact if it's successful. It recently passed a major hurdle when the judge denied a motion to dismiss by the banks. The case is proceeding toward arguments to determine whether class-action status will be granted.

NCLC attorneys are co-counsel in a couple of the cases against the banks.

Lawsuits over bank overdraft fees are not new. Consumers have been challenging them in courts for years.

Within the last decade various cases alleging violations of federal truth in lending and other laws have failed.
 

By: David Pitt - AP