I recently got an overdraft when I forgot about a pending transaction. That's completely fair and I understand what happened.
However, what followed concerns me deeply. I had OD protection on my account. When my checking account went negative, OD Protection was triggered and, even though I don't deposit money into my savings, the interest I've earned on my savings account ($0.04) was transferred into my checking account under the guise of OD Protection and I was charged an additional $10 on top of the $32 for the OD.
How is that legal? How is that ethical or customer focused? It seems like a predatory policy that is designed to prey on financially struggling customer.
I've since disabled that feature on my account. Apparently, I signed up for it when I created the checking account.
Look, if I had money to transfer that would cover the OD, I would completely see the benefit of this program. However, when I don't have the funds, it seems like it is just kicking someone while they are already down and smells unethical to me.
Am I mistaken in my assesment? Is it legal to tack on charges like that? Apparently this wasn't covered in the overdraft law?
Maybe this narrative will help explain:
- Bank: I see you've overdrafted your account, bad news.
- Me: Yep, my bad, here take $32.
- Bank: Wait, bro, looks like you have $1250.04 in your savings. We can transfer $0.04 to protect you from the overdraft.
- Me: Ok, but my overdraft is more than $0.04, though.
- Bank: That's cool, broseph. We'll transfer it and charge you another $10 anyways.
- Me: So is OD Protection a misnomer? What was I protected from? Having more money?
- Bank: evil laugh .. continued evil laughing
I recently heard back from the account specialists with my bank. Although the initial customer rep informed me everything was valid and worked as it was supposed to, the following account specialist insisted what happened to me was a "bug" and the OD Protection transfer shouldn't trigger if the funds don't cover the overdraft, which is how it should work. I don't know if he was being disingenuous or not. He couldn't comment on if other members were affected, but he "assured" me a case is opened and being investigated to gauge the scope of the "bug".
My problem is, with the research I've done, I find it hard to put weight into the "bug" argument. Apparently overdraft related fees are a multi-billion dollar racket. Moreover, the entire system was intentional designed to be that way and the architects worked very hard to ensure an income stream at the expense of their customer's ignorance and financial mismanagement. I just find that baffling this is legal and some political entity hasn't championed the affected consumers, but I suppose lobbyists are quite effective.