Webster Bank Charges Elderly Woman $2,500 In Fees After Bouncing 70 Checks

Bank Lets Old Woman Rack Up Astronomical Fees

So much for local banks behaving better than the big ones.

Webster Bank, a regional bank with 165 branches southern New England and New York, allowed a longtime customer to bounce more than 70 checks and charged her $2,500 in overdraft fees over a period of three months last year, the Hartford Courant reported.

Instead of calling the customer to inquire about what was happening, the bank cleared dozens of checks--most made out to charities--and charged a hefty $36 fee per check. The elderly bank customer, who is 88 years old, lives on a monthly income of less than $2,000. After her family intervened, the bank reduced some of the fees--but still defended its actions. The family requested anonymity to protect their privacy, according to the Courant.

"Our policy is to notify everyone in writing," Jeffrey Brown, the chief administrative officer for Webster Bank and Webster Financial Corp, told the Courant. "You can't always reach people by phone and we want to ensure everyone has all the facts we do. So we send them a written notification. We provide a number they can call us at any time."

But this seems to be a pattern for Webster Bank. In 2010, the bank agreed to pay $2.8 million to settle in a class action lawsuit over the bank's predatory overdraft practices.

And this latest story further highlights how vulnerable the poorest are to bank fees--9 percent of bank customers pay nearly 85 percent of all overdraft fees, according to a 2008 report from the FDIC.

In February, the Consumer Financial Protection Bureau announced it would look more closely at how overdraft fees are marketed and explained to customers--an investigation that could result in additional rules, perhaps even lawsuits, the CFPB said. Since 2010, banks have not been able to automatically enroll customers in so-called overdraft protection programs for debit card or ATM transactions.

Following the Courant's most recent story about the egregious fees, Webster Bank has said it is looking into its overdraft policies.

"We are in the process of adopting changes that will enable us to identify instances of high numbers of overdrafts so that we can offer customers advice on managing their checking account," Sarah Barr, Webster Bank's vice president for external communications, told the newspaper.

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