ORLANDO, Fla. — A Debary man discovered how a bank's overdraft protection policy can do real harm after he was slammed for hundreds of dollars in fees , claiming he never even signed up for the program.
Action 9's Todd Ulrich found many consumers are punished by overdraft policies five years after federal regulators told banks to make big changes.
Would you pay $40 for a cup of coffee and two doughnuts? Chris Gittens did.
“I thought someone stole money out of my account. I just couldn't believe it," he said.
Gittens said his debit charge for $5.30 triggered a $35 overdraft fee in his TD Bank account. In 24 hours, he was hit with seven overdrafts and $245 in fees.
He didn't know it but his account had overdraft protection so all checks and debit charges were paid.
“I don't need overdraft protection. I need protection from the bank,” said Gittens.
It was a double whammy. His bank used a practice called high low. Each day it clears the biggest checks and debits first. A big check can overdraw the account then all the smaller debits rack up overdraft fees.
Gittens claims he made one mistake, but that high low policy created six extra costly fees.
Five years ago, federal regulators told banks and credit unions they could not make overdraft protection automatic. Customers had to opt in.
But studies by The Pew Charitable Trusts found many bank customers still don't know their account has the protection or what it means.
“We found 52 percent of people who overdrew their accounts using debit cards weren't aware they opted into the program that's required by federal law,” said Thaddeus King with The Pew Charitable Trusts.
TD Bank told Action 9 the customer had approved overdraft protection, and it fully complies with federal regulations that make it an option only. And it reviews all overdraft disputes.
“At least I'll know now to opt out of this,” said Gittens.
TD bank said it already planned to end its high low practice next year, which can trigger excessive overdrafts.
Consumer groups said most customers should avoid overdraft protection double check your accounts and opt out.