the illegality of overdraft fees.
but those were already dealt with in the court decisions Wells Fargo and MultiDistrict Lit in Fla.
because banks are enforcing illegal fee, fine and penalty clauses, and the courts have let them so far (big mistake) they got bolder and bolder and all of them do it. there is no real "shopping around". every consumer is stuck with huge, unrealistic fees, fines and penalties.
1) they were told to do so by the OCC (let the customer know and reject a transaction that will incur a fee)
2) they have the ability to do it
3) none of them have offered this feature, even tho they were told to do it 5 years ago!
it is illegal because under basic contract law, you only get actual damages. liquidated damages must be realistic and related to actual, anticipated damages. the banks are supposed to follow the 4 OCC guidelines on setting these fees.
all good reasons.
again, i can do this, neither can you, so why do banks get to do it. i could put it in my contract and on my website and still no court would allow it.
Thursday, September 30, 2010
Two recent court decisions
The first one is the Multi District Litigation in Florida wherein class action plaintiffs sued banks--9 major banks were involved–Chase, Wells Fargo, Citibank, etc.–you name it! The court held that the following claims will stand for discovery: 1) breach of contract for lack of good faith and fair dealing 2) unconscionability ($35 is unconscionable) 3)unjust enrichment; 4) consumer fraud and 5) deceptive trade practices.
whether you know it or not, the banks constantly manipulate balances in their favor. they use sophisticated software to maximize their fees.
this is NOT the law. the law is, if you breach a contract, you only get actual damages and not made up or phanthom damages. fees, fines and penalties are not permitted.
Yesterday someone asked about this and I gave her the law for her case.
One of the things you should know is that the OCC has dictated that before the banks set out fees, fines and penalties, the bank must follow 4 rules in setting these or changing these. The rules are:
(b) Considerations. The establishment of non-interest charges and fees, and the amounts thereof, is a business decision to be made by each bank, in its discretion, according to sound banking judgment and safe and sound banking principles. A bank reasonably establishes non-interest charges and fees if the
bank considers the following factors, among others:
(1) The cost incurred by the bank, plus a profit margin, in providing the service;
(2) The deterrence of misuse by customers of banking services;
(3) The enhancement of the competitive position of the bank in
accordance with the bank's marketing strategy; and
(4) The maintenance of the safety and soundness of the institution.
what the court found is that while the banks had a lot of memos on maximizing BSE or Balance Sheet Engineering, they had no memos or meetings that they followed these 4 criteria at all. Hence WF fees were found illegal.
whether you know it or not, the banks constantly manipulate balances in their favor. they use sophisticated software to maximize their fees.
this is NOT the law. the law is, if you breach a contract, you only get actual damages and not made up or phanthom damages. fees, fines and penalties are not permitted.
Yesterday someone asked about this and I gave her the law for her case.
One of the things you should know is that the OCC has dictated that before the banks set out fees, fines and penalties, the bank must follow 4 rules in setting these or changing these. The rules are:
(b) Considerations. The establishment of non-interest charges and fees, and the amounts thereof, is a business decision to be made by each bank, in its discretion, according to sound banking judgment and safe and sound banking principles. A bank reasonably establishes non-interest charges and fees if the
bank considers the following factors, among others:
(1) The cost incurred by the bank, plus a profit margin, in providing the service;
(2) The deterrence of misuse by customers of banking services;
(3) The enhancement of the competitive position of the bank in
accordance with the bank's marketing strategy; and
(4) The maintenance of the safety and soundness of the institution.
what the court found is that while the banks had a lot of memos on maximizing BSE or Balance Sheet Engineering, they had no memos or meetings that they followed these 4 criteria at all. Hence WF fees were found illegal.
Saturday, October 10, 2009
Service Charge and Fees are Illegal
There is absolutely no doubt that fees, fines and penalties are completely illegal and this concept applies to anyone that does business in the US, including banks, credit card companies, your doctors, your lawyer (a lawyer can have an ethics complaint filed against them for such a practice) and ANYONE else offering a product or service in commerce or industry. This concept involves a state wide law, call the Uniform Commercial Code ("UCC") which governs business in all 50 state and 7 US territories. These uniform laws, and the UCC in particular, is one of the singular reasons why the US has become over the years, a super economic power in the world. When you tamper with the UCC, you tamper with the basic efficiencies of the US economy. The courts know this. The legislators throughout the US know this. That is why they enacted the UCC throughout the US and 7 territories.
Getting back to fees, fine and penalties, then why are they illegal? The reason for this is that needless fees, fines and penalties hamper business in the US and judges won't impose them. People should be free to break their contracts and go elsewhere when the economy changes. This creates more business, more cash flow and more good and services when people are only getting paid for what they sell or service.
This about it, to allow a business person to charge something extra for a contract defaults (which happens all the time, we constantly made decisions regarding how to make our lives better and more efficient, and well, if you need to part B instead of party A because party B came up later but it's family, you know you will do that because that relationship is more important.
Now, when banks do this it becomes down right evil. It slides into the field of "usury" which is where Dante put entities that practiced this on the lowest rungs of hell. When you overdraft your checking account for a few minutes and your bank charges you $35 but you have plenty of money in that bank, except in a different account, that's definitely "money for nothing and chicks for free". Talk about communism for corporations. Yikes!
The banks know about all your accounts and yet they do this all the time anyway. People complain about bailing out the banks and credit card companies, but they don't realize is that all the fees, fines and penalties they have been charging for years is completely illegal. If you ask me and many lawyers and economists, one of the major reasons for the current crunch in the credit business is exactly these illegal fees, fines and penalties. They add up so quickly, consumers can't pay their debts and so they stop paying all together and the whole system topples like dominoes. Now no one will loan money because they know it is likely a consumer eventually won't pay a dime. But the financial industry brought this stalemate upon themselves. It's completely karmic in nature. Banks and credit card companies have to drop these illegal practices or we will lose the entire economy eventually. Banks won't loan and consumers won't borrow, (which is happening now, studies show 70% of consumers are using debit cards only), and so the economy will stagnate.
And credit card companies that charge $20, $30, even up to $50 for a day or two late payment are absolutely no better--they are down right evil in doing so. The employees that enforce these invalid, illegal and unenforceable covenants are equally as responsible in their own right.
My suggestion is that if you have a job in a bank or credit card company and you are part of this system, is to simply get another job. It's not worth it.
Getting back to fees, fine and penalties, then why are they illegal? The reason for this is that needless fees, fines and penalties hamper business in the US and judges won't impose them. People should be free to break their contracts and go elsewhere when the economy changes. This creates more business, more cash flow and more good and services when people are only getting paid for what they sell or service.
This about it, to allow a business person to charge something extra for a contract defaults (which happens all the time, we constantly made decisions regarding how to make our lives better and more efficient, and well, if you need to part B instead of party A because party B came up later but it's family, you know you will do that because that relationship is more important.
Now, when banks do this it becomes down right evil. It slides into the field of "usury" which is where Dante put entities that practiced this on the lowest rungs of hell. When you overdraft your checking account for a few minutes and your bank charges you $35 but you have plenty of money in that bank, except in a different account, that's definitely "money for nothing and chicks for free". Talk about communism for corporations. Yikes!
The banks know about all your accounts and yet they do this all the time anyway. People complain about bailing out the banks and credit card companies, but they don't realize is that all the fees, fines and penalties they have been charging for years is completely illegal. If you ask me and many lawyers and economists, one of the major reasons for the current crunch in the credit business is exactly these illegal fees, fines and penalties. They add up so quickly, consumers can't pay their debts and so they stop paying all together and the whole system topples like dominoes. Now no one will loan money because they know it is likely a consumer eventually won't pay a dime. But the financial industry brought this stalemate upon themselves. It's completely karmic in nature. Banks and credit card companies have to drop these illegal practices or we will lose the entire economy eventually. Banks won't loan and consumers won't borrow, (which is happening now, studies show 70% of consumers are using debit cards only), and so the economy will stagnate.
And credit card companies that charge $20, $30, even up to $50 for a day or two late payment are absolutely no better--they are down right evil in doing so. The employees that enforce these invalid, illegal and unenforceable covenants are equally as responsible in their own right.
My suggestion is that if you have a job in a bank or credit card company and you are part of this system, is to simply get another job. It's not worth it.
Thursday, August 27, 2009
NSF, OD, INF Bank Charges are all illegal
While I have seen numerous blogs and websites (even purportedly from attorneys) stating that NSF, OD and INF bank charges are okay, they are not.
Contract Laws do not permit anyone to charge fees, fines and penalties for breaching contracts. Clauses in contracts that purport to do so are void, voidable and unenforceable in court.
Somehow the banks have convinced everyone they are apart from and above the law. Perhaps it comes from the $100 parking meter tickets that used to be $5 twenty years ago (these are set by ordinance, so yes, they are legal--you need to vote out your alderman), but I'm not sure where this comes from.
Believe me, if fees, fines and penalties were legal, I'd be charging one on every overdue bill, every day, like the banks do, but the Illinois ARDC would never let me do that.
In any case, what I've decided to do is to sue JP Morgan Chase and see what happens.
Contract Laws do not permit anyone to charge fees, fines and penalties for breaching contracts. Clauses in contracts that purport to do so are void, voidable and unenforceable in court.
Somehow the banks have convinced everyone they are apart from and above the law. Perhaps it comes from the $100 parking meter tickets that used to be $5 twenty years ago (these are set by ordinance, so yes, they are legal--you need to vote out your alderman), but I'm not sure where this comes from.
Believe me, if fees, fines and penalties were legal, I'd be charging one on every overdue bill, every day, like the banks do, but the Illinois ARDC would never let me do that.
In any case, what I've decided to do is to sue JP Morgan Chase and see what happens.
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