Bank of America just got a slap on the wrist for reportedly stealing something on the order of 4.5 billion dollars from its debit card customers. How do banks routinely break the law and get away with it?

Here’s how this particular bank scam works.

Suppose one day you use your debit card to make three purchases, all around ten dollars. Then you end your day with one purchase of $100. Suppose further your account had only $90 in it. In this case the final purchase of $100 overdraws your account and you get dinged $35 for an overdraft, as per the agreement you have with the bank.

Some genius at the bank figured out how to steal a bunch more of your money from this same situation. Set up the computer program to examine all your purchase for the day. Then charge the biggest one against your account first. Since the account only had $90 in our example, this immediately generates a $35 overdraft fee. Then, each of the other three transactions also generates a $35 overdraft fee.

VOILA. Instead of $35 dollars the bank now takes $140 from you.

Bank of America used this scam, according to the local newspaper, on more than 13 million customers for a decade. The settlement requires Bank of America to pay $410 million. This settlement is one of the largest on record for a class action suit.

But wait! Lets do a little arithmetic.

Suppose each of those 13 million customers was unfairly charged only once during those ten years. 13 million customers times $35 for one overdraft = $455 million.

Or, suppose these customers are more like you and me and do small overdrafts once or twice a year. Let’s keep it simple and assume on average these customers were unfairly charged for ten overdrafts during this ten years. 13 million customers times $35 times ten = $4,550,000,000.

Wow! That’s four and half billion dollars of unfair fees. This by the way is the estimate the plaintiffs used in the suit.

The court allowed Bank of America to get out of this for $450 million.

Crime really does pay if you are a bank. Steal ten bucks and get fined one dollar. Steal ten million dollars and get fined one million.

Of course, Bank of America is not alone in this sort of criminality. All of the major banks have been caught in criminal activities in recent years. And all of them have been fined a fraction of what their criminal activity yielded them. The penalty for a bank stealing our money is a slap on the wrist … just a small cost of doing business.
Contact me: I love to hear from readers. Email me at cyberneticapress at gmail dot com. Thanks, Barry Clemson

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