PNC to pay $90 million in overdraft settlement

PNC Bank has agreed to pay $90 million to settle a class-action suit challenging a common bank practice: maximizing overdraft fees by reordering the clearing of debits and ATM withdrawals, so that as many small debits as possible generate overdrafts.

The suit has already led to several such settlements, according to an announcement from plaintiffs' lawyers, including a $410 million settlement agreement last year with Bank of America. And the practice itself has been under scrutiny by the new Consumer Financial Protection Bureau.

Since 2010, the Federal Reserve has required banks to obtain an "opt in" from customers before subjecting them to the practice.  If customers don't opt in, their purchases or withdrawals will probably be declined if they push a balance into the red.

C'mon - with a card pitched as an alternative to credit, and as a way to pay directly with your own money, isn't that what you should have expected all along?

So far, no word of settlement with Wells Fargo Bank, subject of a scathing 2010 ruling by a federal judge in California, who accused the bank of "gouging and profiteering" in practices that essentially gave customers a hidden line of credit they'd never requested. Wells Fargo appealed a $200 million court judgment. That judge said:

The essence of this case is that Wells Fargo has devised a bookkeeping device to turn what would ordinarily be one overdraft into as many as ten overdrafts, thereby dramatically multiplying the number of fees the bank can extract from a single mistake. The draconian impact of this bookkeeping device has then been exacerbated through closely allied practices specifically “engineered” — as the bank put it — to multiply the adverse impact of this bookkeeping device. These neat tricks generated colossal sums per year in additional overdraft fees, just as the internal bank memos had predicted. The bank went to considerable effort to hide these manipulations while constructing a facade of phony disclosure.

A PNC spokesman hasn't returned a call requesting comment.