Class Action Lawsuit Filed Against Banks Charging Excessive Service Fees And Overdraft Charges

Lawsuit filed against area bank group

BY GEOFF WEST | TELEGRAM STAFF
Saturday, Jan 14, 2012 4:30 AM

BELTON — A class-action lawsuit filed in Harris County claims three Texas banks profited by devising a “shocking” and “sickening” business model almost entirely dependent on the fees assessed to low-income and U.S. military account holders.
The lawsuit filed Dec. 23 in Harris County District Court seeks undetermined restitution from Fort Hood National Bank, First National Bank Texas and First Convenience Bank as well as its holding companies, FCBI Delaware, Inc. and First Community Bancshares, Inc. on behalf of 16 Texas residents, and “potentially thousands more” account holders, according to the filing.
Bill L. Voss, representing the plaintiffs, said evidence demonstrates how the banks carefully defrauded a targeted demographic — low-income and military personnel — through a policy of posting debit transactions.
“It’s not one of their profit models. It’s their only real profit model,” Voss said. “The evidence will show the only way they make a profit is through these excessive service fees and overdraft charges.”
An attorney for the Houston law firm representing the banks and holding companies was unavailable Friday.
A representative in the marketing department of Fort Hood National Bank said her department, which handles media inquires, would not comment.
The banks assessed overdraft fees by using a non-chronological, or largest-to-smallest, re-ordering system in its posting of each debit transaction, which allowed more overdraft fees to build on smaller transactions, according to the lawsuit.
The practice isn’t new. The revenue generated from overdraft fees was once a “golden egg for the banking industry” before bad press, federal oversight and a slew of class-action lawsuits mostly curbed the practice among the major banks, Voss said.
But unlike large banks, which even prior to the public backlash would occasionally refund overdraft fees for non-habitual offenders, small and mid-sized banks often have less revenue streams, such as the interest generated off large loans.
Assessing and collecting overdraft fees — sometimes $35 or more for a $2 transaction — is one way to drive profit, Voss said.
“Unfortunately, unscrupulous banks … make this their number one profit model,” he said. “It’s Big Business making their money off the backs of the working class. And not only the working class, but the military.”
The lawsuit also claims the banks failed to give customers the ability to opt-out of overdraft protection — in other words, pre-request the bank cancel any transaction that would exceed the account balance — and did not adequately disclose an opt-out right after being required to do so under new federal regulations.
Voss said restitution has less to do with the lawsuit than customers wanting to change a predatory culture.
“We hope this may reach enough people’s hearts, and in places that really matter, so we can make real changes in the industry,” he said. “I think the evidence is going to shock people. Not only because of what they’re doing, but because of who they’re doing this to.”
gwest@tdtnews.com




The Voss Law Firm, P.C.
The Voss Law Center
26619 Interstate 45 South
The Woodlands, TX 77380

Phone: 281-VICTORY
Toll free: 1-866-276-6179 
Fax: 713-861-0021


The Voss Law Firm, P.C. represents clients on a local, national and international basis. We proudly serve all Texas counties and cities including but not limited to the following: Harris County, Montgomery County, Jefferson County, Houston, The Woodlands, Beaumont, El Paso, San Antonio, Austin, Sugar Land, Dallas, Fort Worth, Orange, and Port Arthur, as well as companies and individuals along the Gulf Coast and around the globe.

 



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26619 Interstate 45 South
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Phone: 281-VICTORY (842-8679)
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