Covered in bank fees with no way out

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Christopher Elliott

Question: I recently gave my property management company a check for a deposit on a new apartment my daughter and I were moving into. Usually, they’d wait until the lease was signed to deposit the check and after discussing it with the property caretaker, I concluded that it would be the same this time.

Not so. In fact, they took the check out a couple of days before payday — a week earlier than I expected.

My bank, Wells Fargo, has a nifty little policy of waiting two to three days before emailing their customers about an overdraft. I check my bank account perhaps twice on a normal week, or before I go and spend money at the store. When the email came through to say I was overdrawn, I was surprised and pretty horrified, since it was almost moving day.

I went online and noticed, to my utter dismay, that they had not only applied a fee to the overdraft caused by the check, but then of course, three or four more fees for checks that had been written, and for which there were insufficient funds.

All of a sudden I was about $120 in the hole. Wells Fargo covered three more authorized debits before they stopped paying and charging fees. Before I could do much of anything else, a couple of companies had asked for their monthly payments, which Wells Fargo had refused, but then charged me a $35 fee.

It was moving week and I was covered in bank fees!

I called Wells Fargo and asked them to freeze the account. A representative said they couldn’t do that. I called around and tried to make as many changes to the payment options on existing accounts coming out of the Wells Fargo bank account that I could.

Some companies were helpful and understanding; others said that they could not change without an alternative payment method, or that they had already put the payment through for the month. Two days later, a bank rep called me again to let me know I was even more overdrawn — all bank fees.

Again, I asked if the account could be frozen. And again, I was told “no” and that they couldn’t do that.

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I can understand a fee as punishment for an overdraft. But at this stage, the fees total $805. That’s a pretty big punishment for a situation I tried to resolve from the get-go. Can you help me? — Jeanne Bower, Rochester, Minn.

Answer: Wells Fargo should have helped you escape from this fee trap when you phoned it the first time. Instead, it stood by and watched the surcharges pile up.

There’s a reason for that. Fees are a significant source of revenue for banks, something that as a Wells Fargo customer myself, I can attest to firsthand. You have to keep a close watch on your bank account to make sure you’re not getting hit by an unexpected surcharge. But you already know that.

Here are a few other things you probably know by now, but which merit repeating: It’s your responsibility to make sure there’s enough money in your account to cover purchases. Automatic payments are agreements between you and another business, and according to Wells Fargo, it isn’t aware of the transaction until it happens – so it can’t arbitrarily end an automatic payment to another company.

Wells Fargo also offers several free tools that will help you monitor your account by sending you account alerts when your balance falls below a threshold. That might have prevented your bank account from turning into a fee-for-all.

I contacted Wells Fargo on your behalf, and a representative told me that the other option you considered – freezing your account – wasn’t allowed. “Putting a block on an account is done to help prevent additional fraud,” a spokeswoman said. “It’s not to be used as a financial management tool.”

Still, the bank’s initial response could have been more helpful. Seems to me that if you’re going to stop customers from freezing their accounts, you should offer some way of editing their autopay options.

After I asked about your account trouble, a manager called you, apologized for what he called a “complex” situation, and refunded all $805 in bank fees. Wells Fargo also froze your account and has allowed you to open a new one, giving you a fresh start.

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Christopher Elliott

Christopher Elliott is the founder of Elliott Advocacy, a 501(c)(3) nonprofit organization that empowers consumers to solve their problems and helps those who can't. He's the author of numerous books on consumer advocacy and writes weekly columns for King Features Syndicate, USA Today, Forbes and the Washington Post. He also publishes Elliott Confidential, a critically acclaimed newsletter about customer service. If you have a consumer problem you can't solve, contact him directly through his advocacy website. You can also follow him on Twitter, Facebook, and LinkedIn, or sign up for his daily newsletter. Read more of Christopher's articles here.

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