Wells Fargo got to tell its side of the story this morning in consumer class action over the overdraft fees it charges.
Plaintiff lawyers from Lieff Cabraser accuse the bank of shuffling debit card buys and checks so that hapless customers’ highest transactions post first. That leads to way more fees Wells can slap on when accounts go into the red. But Covington & Burling partner Sonya Winner told U.S. District Judge William Alsup that plaintiffs have to prove bad faith, and that there were plenty of reasons other than getting fees that the bank operates the way it does.
When customers swipe their debit cards, there’s often a time delay between that first authorization request and final settlement of the transaction, and the bank often doesn’t know the entire amount of the purchase until later. Thus chronological ordering is difficult to keep consistent and transparent, Winner said in her opening statement.
Also, by processing large checks first, the bank reasoned that it would protect customers from having their really important expenses – like a mortgage payment – bounce back. And, the bank posts credits before debits, which gives customers some breathing room, Winner said.
The bench trial (free reg. req.) before Alsup has potential damages of over $300 million, and is the forerunner of a much larger multidistrict class action currently underway against several banks in Miami federal court.
Winner delicately admitted Wells Fargo did take its own revenue stream into account when devising its policies, arguing it would have been “irresponsible” for the bank to ignore its shareholders. But the ultimate responsibility for the overdraft fees lies with the customers, Winner said, because some do not properly manage their expenses. The majority of consumers are on the ball and don’t incur fees, she said.
“This case is ultimately a theory in search of evidence,” she said.
There was one fun moment before openings began. In instructing the lawyers on the importance of using the right witnesses to introduce a focused set of documents, Alsup tried to give some context.
“This is not Clarence Darrow and William Jennings Bryan, in which argument can be made via cross examination ad infinitum,” he said.
A moment later, with Winner at the lectern, he asked the lawyers whether they even knew who Darrow and Bryan (of the Scopes trial) were.
“I’m just wondering which one I am,” Winner said, drawing a hearty laugh from Alsup.
“You’re William Jennings Bryan. Or, if you want to be Clarence Darrow, you can be Clarence Darrow,” Alsup said.