Key Bank sued over overdraft fees

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by JIM FORMAN / KING 5 News

Bio | Email | Follow: @Jimformanking5

KING5.com

Posted on February 19, 2010 at 11:06 PM

Updated Friday, Feb 19 at 11:11 PM

SEATTLE - A lawsuit filed in Seattle Federal Court accuses Key Bank of overcharging customers when it comes to ATM and debit card overdrafts. The lawyers hope to turn the action into nationwide class action.

The suit accuses Key Bank of operating an "unfair, deceptive and unconscionable policy" when it "holds charges and then reorders them to maximize the number of overdrafts and associated service fees."

That is exactly what Heather Kelm of Lynnwood says happened to her a few weeks ago when she forgot to balance her checkbook and went out for a Saturday night of pizza and bowling.

"I understand the three that overdrew my account. I am more than OK with that because I should have balanced my checkbook before I went out," Kelm said.

But what infuriated her was when she was slapped with nine overdraft fees because Key Bank processed the transactions in a batch and reordered them from most to least expensive.

"So I am paying an overdraft for something I bought on Wednesday when I knew I had money in my account," she said.

The lawsuit wants the court to order Key Bank to pay back people like Kelm, not only the fees, but interest and penalties as well.

"Key Bank does not comment on pending litigation," said Key Bank spokesperson Lynne Woodman.

Some banks facing pressure from Congress have changed their overdraft policies. And a bill is currently being floated in Washington D.C. that would require banks to notify customers before an ATM or debit transaction puts them in an overdraft situation.

As for Heather Kelm, she hopes Key Bank changes the way it does business.

"If I am out of money and I am spending 50 cents or $3 at Starbucks, well, deny my card. I would prefer not to have to pay $37 for my latte," she said.

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