Class-action suit filed against United for debit card deception

RIPLEY –- A state financial institution is accused of using debit cards as a means of bilking its customers out of money. Jonathan Jones initiated a class-action lawsuit on April 14 against United Bank, and its parent company, United Bankshares Inc. in Jackson Circuit Court. In his complaint, Jones, a Charleston resident alleges, United derives a portion of its profits by unfairly and improperly structuring debit card payments so customers will potentially incur overdraft fees. According to the suit, Jones alleges upon opening an account, United customers are provided a booklet called "Rules and Regulations Governing Account" also known as the "Account agreement." In the agreement, United "makes no mention of [its] regular practice of reordering transactions from highest amount to lowest amount and charging overdraft fees when in fact an account has not been overdrafted." This reordering, Jones claims, has nothing "to do with the soundness of the banking system or operational efficiency." Instead, it is "to maximize overdraft fees it can change." Currently, United charges $34 per overdraft. According to Jones' suit, United will charge an overdraft "for a 'negative balance' made exclusively of previously charged overdraft fees." Though he provides no specifics, Jones alleges United did not warn him if his account was overdrawn, was going to be overdrawn or if additional transactions would result in overdraft fees. In spite of knowing a customer has a negative balance, Jones maintains United "encourages the customer to incur more overdraft changes by approving – rather then prudently declining – subsequent debit card purchases and other electronic transactions." United's overdraft scheme, Jones alleges, even applies to those whose accounts have sufficient funds to cover debits. Despite facing little if any risk, United has charged an overdraft fee to accounts where it has placed a "hold" on actual funds though the account has not dropped below zero. In the suit, Jones maintains the practice is not limited to United. He citied a 2008 Federal Deposit Insurance Corporation study that found almost 75 percent of service charge income of all FDIC-regulated banks came from overdraft fees. That amount, according to the study, was in excess of $27 billion. Jones' suit provides no specifics on how much revenue United generated from overdraft fees. According to its Web site, United, with dual headquarters in Charleston and Washington, D.C., holds $7.2 billion in assets in the 111 branches it has in West Virginia, Ohio, Virginia, Maryland and Washington. Along with certification of the suit as class-action, Jones asks that he, and other potential class members, be awarded unspecified damages, including disgorgement and restitution of all overdraft fees, statutory penalties for each violation of the state Consumer Credit and Protection Act, court costs, interest and attorney fees. He is represented by Charleston attorneys David L. Grubb, Cameron S. McKinney and Kristina Tomas Whiteaker with the Grubb Law Group and Hassan A. Zavareei and Jeffrey D. Kaliel with Tycko and Zavareei in Washington, D.C. The case is assigned to Judge Thomas C. Evans III. Jackson Circuit Court case number 11-C-50

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