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#298468 - 01/05/05 04:54 PM
Re: OD fees-accounts w/ social security deposits
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Power Poster
Joined: Nov 2001
Posts: 7,984
FINALLY ABOVE the gnat line
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ABA Newsbytes posted a link to the actual court ruling and the reasons behind it. BOFA apparently violated a California STATE law (actually several of them). I don't think this will have an impact on those of us with no banks in California. Although I have written our attorney to ask if we should treat our customers who have moved to California differently.
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#298469 - 01/05/05 05:09 PM
Re: OD fees-accounts w/ social security deposits
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100 Club
Joined: Dec 2002
Posts: 142
Southeast Michigan
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Quote:
ABA Newsbytes posted a link...
I was just there and didn't see it. Can you post a link? Thanks in advance.
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#298470 - 01/05/05 05:31 PM
Re: OD fees-accounts w/ social security deposits
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Power Poster
Joined: Nov 2001
Posts: 7,984
FINALLY ABOVE the gnat line
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I don't know if you have to be a member to receive www.aba.com/aba/documents/news/decision.pdf or not. It is not copyrighted material - it is a public document.
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"Once you learn to read, you will be forever free." - Frederick Douglass
My Opinion Only.
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#298471 - 01/05/05 10:29 PM
Re: OD fees-accounts w/ social security deposits
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Anonymous
Unregistered
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Do you think banker's could get in trouble for adding language to the Reg DD disclosure stating: If you have SS funds placed in your account you may be charged an NSF/Overdraft Fee is you overdraw your account?
Any help?
Thanks!
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#298472 - 01/05/05 10:52 PM
Re: OD fees-accounts w/ social security deposits
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Anonymous
Unregistered
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In 2002's Lopez v. Washington Mutual Bank, the court ruled it was a violation of FEDERAL Social Security Act. Doesn't this FEDERAL law apply to all banks? The ruling said there had to be a "knowing affirmative and unequivocal" consent by the social security recipient. If we only state in our lengthy deposit agreement that we have the right of setoff, I don't see that we have complied with this rule. Sounds like they want something signed.
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#298473 - 01/05/05 11:07 PM
Re: OD fees-accounts w/ social security deposits
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10K Club
Joined: Oct 2000
Posts: 27,750
On the Net
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Lopez vs WaMu and others are in CourtWatch.
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AndyZ CRCM My opinions are not necessarily my employers. R+R-R=R+R Rules and Regs minus Relationships equals Resentment and Rebellion. John Maxwell
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#298474 - 01/06/05 02:57 PM
Re: OD fees-accounts w/ social security deposits
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Anonymous
Unregistered
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Quote:
In 2002's Lopez v. Washington Mutual Bank, the court ruled it was a violation of FEDERAL Social Security Act. Doesn't this FEDERAL law apply to all banks? The ruling said there had to be a "knowing affirmative and unequivocal" consent by the social security recipient. If we only state in our lengthy deposit agreement that we have the right of setoff, I don't see that we have complied with this rule. Sounds like they want something signed.
This case is being heard in a state court and (I believe) the decision is still tentative. The Lopez case was heard in federal courts. The state case also purports that BOA's practices constitute violations of state law.
You are correct, in that it certainly does help a bank's position if the deposit account agreement specifically addresses specific consent on the customer's part to pay OD and NSF fees from an account with social security direct deposits.
I've heard that some banks are considering setting up special accounts for direct SSA benefit deposits where ODs will not be paid and NSF fees will not be charged. Of course, they will carry a high service charge and nobody will want them. Unfortunately--as we all know--many court decisions have unintended consequences.
I'm really a bit perplexed about why Congress has not stepped forward to take care of this issue. Surely, the SSA understands the implications for both the federal government and citizens receiving benefits. This tentative ruling is a bad deal all around for everyone except the plaintiffs and their lawyers.
You can read more here:
Overdraft Fees Haunt Bank of America Article on Boston Globe Web Site
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#298475 - 01/06/05 03:00 PM
Re: OD fees-accounts w/ social security deposits
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Anonymous
Unregistered
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Sorry! The Boston Globe article is: Here
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#298476 - 01/06/05 03:26 PM
Re: OD fees-accounts w/ social security deposits
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Platinum Poster
Joined: May 2001
Posts: 715
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I'm wondering if we should add something to our Reg DD disclosures regarding this, in response to the judges basis for decision.
That won't fly in California. The judge also ruled that you can't put this into a disclosure because it is illegal to use ss deposits to cover other obligations of the customer. BofA laywers told the customer service represntitives on several occasions that doing so was illegal. The judge also cited the bank's advertising/promotional material implied that these deposits were safe. You and I know this was referring to the safety of direct deposit over losing a check in the mail, but she stated that this was meant to convey that it also meant the monies were safe from the right of offset.
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#298477 - 01/06/05 03:27 PM
Re: OD fees-accounts w/ social security deposits
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Power Poster
Joined: Nov 2001
Posts: 7,984
FINALLY ABOVE the gnat line
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See the full court opinion on Lopez v WaMu here Notably - body of the opinion states this, "In our view, it is sufficient and "meaningful" consent for the recipient to have executed the account agreement which notified him of the bank's standard practice of using deposits to cure overdrafts and then to have provided the bank with a deposit to apply in such fashion." The conclusion states, "Washington Mutual's practice of applying directly deposited social security and SSI benefits to overdrafts and overdraft charges does not violate 42 USC 407(a) and 1383)d)(a) because there was sufficient consent by the plaintiffs to such practice." You may need to discuss your current practices with your legal counsel to determine if your account documentation meets the "sufficient consent" standard. One of the faults the state court found with BOFA was that the language was buried in a 71 page FACTS booklet.
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"Once you learn to read, you will be forever free." - Frederick Douglass
My Opinion Only.
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#298478 - 01/06/05 05:53 PM
Re: OD fees-accounts w/ social security deposits
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Anonymous
Unregistered
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Quote:
The judge also cited the bank's advertising/promotional material implied that these deposits were safe. You and I know this was referring to the safety of direct deposit over losing a check in the mail, but she stated that this was meant to convey that it also meant the monies were safe from the right of offset.
Another example of why we always need to encourage our marketing folks to "say what you mean, and mean what you say."
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#298479 - 01/06/05 06:42 PM
Re: OD fees-accounts w/ social security deposits
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Anonymous
Unregistered
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Is this going to open up a horrible can of worms: Where anyone who has an account with any bank and has Direct Deposit of SS funds can sue for ALL od fees that have been taken from that account since they started their SS Direct Deposit? I'm afraid the answer to question.
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#298481 - 01/06/05 10:12 PM
Re: OD fees-accounts w/ social security deposits
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Gold Star
Joined: Jun 2004
Posts: 290
California
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The judge has issued the decision in the Miller v. B of A case (December 30). It mirrors the tentative decision issued earlier. It was heard in the San Francisco Superior Court (state court) and will most likely be appealed by B of A. Restitution ordered was $284,385,741.00.
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#298482 - 01/06/05 11:17 PM
Re: OD fees-accounts w/ social security deposits
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Diamond Poster
Joined: Feb 2001
Posts: 2,245
US of A
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Quote:
I can see a possible solution to the problem, though it is more trouble in many ways. If SS payments are deposited in a savings account, this would reduce the likelyhood of fees. In these accounts, minimum balance fees could easily be waived. In addition, if the customer chooses to use those funds in another account, the bank cannot presume how funds were used, therefore eliminating the fee issue? Is this a bit convoluted? lol
I'm not sure about the details, but this is an idea that I've heard floating around. Have the customer set up two accounts, one for the SSA direct deposit and another to write checks. I think setting up a savings account for the SSA deposit is a good idea. (I assume the customer would have to accept the responsibility for manually transferring funds from the direct deposit account to the "transaction" account.)
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"If you want to tell people the truth, make them laugh, otherwise they'll kill you." ~ Oscar Wilde
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#298483 - 01/06/05 11:40 PM
Re: OD fees-accounts w/ social security deposits
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10K Club
Joined: Oct 2000
Posts: 27,750
On the Net
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The manual transfer is what will cause the hard-sell and if the "other guy" doesn't require that you'll have heck to pay. But if it is in an ATS account and covers it automatically, the effect would be the same as it is now. Perhaps it will get fixed in a way that applies to national and state laws.
_________________________
AndyZ CRCM My opinions are not necessarily my employers. R+R-R=R+R Rules and Regs minus Relationships equals Resentment and Rebellion. John Maxwell
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#298484 - 01/07/05 04:14 PM
Re: OD fees-accounts w/ social security deposits
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100 Club
Joined: Nov 2000
Posts: 176
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I've read the CA case a couple of times but wasn't clear on whether the issue was both the NSF/OD fees and the actual paid checks OR was it just the checks? It would seem to me that if both the fees and paid checks are the issue; then the only prudent thing to do would be not open the account. Not the best of solutions but if we have to return the checks waive the fee associated with the account; it might be better to close or not open the account. This may be extreme but what other alternative is there...
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#298485 - 01/07/05 05:14 PM
Re: OD fees-accounts w/ social security deposits
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Platinum Poster
Joined: Sep 2003
Posts: 729
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So is the concensus that we should be adding language to our disclosures or not?
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#298486 - 01/07/05 05:15 PM
Re: OD fees-accounts w/ social security deposits
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Diamond Poster
Joined: Feb 2001
Posts: 2,245
US of A
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Chris, you've identified the real problem resulting from this case. People who recieve SSA benefits are the ones who will really pay the price if this situation is allowed to stand. We know the SSA understands the implications of this -- it issued this statement about the Lopez case. I just can't understand why the federal government has not yet done anything about this. Congress could very easily pass a bill to take care of this.
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"If you want to tell people the truth, make them laugh, otherwise they'll kill you." ~ Oscar Wilde
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