Broadest Class Action to be Lodged Against Major Banks & Institutions

Discussion in 'Current Affairs' started by House, Aug 12, 2014.

  1. House

    House Administrator Staff Member

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    Let's see where this goes...

    SMH

    A bank is a business and should be allowed charge what it wants. Don't want to pay late fees? Don't pay late!
     
  2. JulieW

    JulieW Well-Known Member Silver Stacker

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    Have to agree. Same with buying cheap and complaining about quality.
     
  3. Big A.D.

    Big A.D. Well-Known Member Silver Stacker

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    What about where the banks had their systems set up to hold back on credit transaction until debit transactions pushed the account into negative balance to engineer bounce and overdrawn fees?

    E.g. Someone's account balance is at $50 when their $1000 salary reaches the bank at 10am. The bank doesn't credit their account but processes a scheduled $69.95 direct debit, putting their balance at -$19.95. Then the bank charges a $50 "Account overdrawn" fee" and then processes the salary credit at 4pm.

    This was standard practice at several big banks for quite a while. They made a lot of money doing it.
     
  4. House

    House Administrator Staff Member

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    That's obviously an appalling practice but the judge was addressing how much they charge, not the (hopefully now illegal) process.
     
  5. Big A.D.

    Big A.D. Well-Known Member Silver Stacker

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    Having your account closed as a result of being a bad credit risk.

    That's what other businesses do, but the banks didn't (and still don't) want to cut people off because they lose business. They want to have their cake and eat it too. Charging a late payment fee is an illegal penalty when the amount charged bears no relation to any costs incurred by the bank. Essentially, the account holder breaches their agreement with the bank to make their payment on time and the bank says "that will be one hundred beeelion dollars!!" and goes totally overboard in charging an inequitable amount of compensation for the breach.

    If the bank does something for the account holder like allows a $200 ATM withdrawal when they've only got $170 in their account, that's generally fine to charge for.
     
  6. finicky

    finicky Well-Known Member Silver Stacker

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  7. renovator

    renovator Well-Known Member

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    Ii have a c/c that i rarely use & it had a $29 purchase that was put on it the day after i thought i payed it out then i left for overseas & went to use it again about a year later & it was turned off & i owed them nearly $200 from memory to get them to turn it back on .They didnt give a shit that i was OS & didnt know about it ....i was pissed why do they have your phone number if they never use it . A 1c txt message could have saved me $170 . .

    Im all for this ripoff fee being brought in line with costs
     
  8. Roswell Crash Survivor

    Roswell Crash Survivor Well-Known Member Silver Stacker

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    Watch the litigants lose this case.

    Proverbial palms are being greased as we type.

    Wouldn't be surprised if traditional news avenues abruptly stop following this case.
     
  9. renovator

    renovator Well-Known Member

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    Either that or they will make this their "feel good" story for the year
     
  10. Big A.D.

    Big A.D. Well-Known Member Silver Stacker

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    No, a fee-for-service is different from a penalty arising through breach of contract.

    The difference is that a fee for doing something can be charged at whatever rate is agreed on, but a penalty for breach of contract must be equitable i.e. limited.

    A bank that attempts to process a cheque and finds that the drawer doesn't have enough funds can either bounce the cheque or, if they're feeling helpful, pay it and put the drawer's account into deficit. In the same way, a bullion dealer might confirm a price, take an order, purchase replacement stock and prepare the items for dispatch before receiving a request to cancel the order. In both cases, one party to the transaction has done something (or undone something) at the other party's request.

    If you don't pay your credit card by the due date, the bank doesn't do anything because you're not asking them to do anything.
     
  11. bordsilver

    bordsilver Well-Known Member Silver Stacker

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    +1
     
  12. Big A.D.

    Big A.D. Well-Known Member Silver Stacker

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    Because you're asking the dealer to do something i.e. cancel the order (or buy back an undelivered order, or undo a paper trade, or whatever is involved in reversing the orders of steps taken when the initial transaction was entered into).

    By contrast, you'd create a material breach of contract if you simply didn't pay for the order. In that case, the dealer would be entitled to seek compensatory damages i.e. actual costs (and personally I wouldn't try getting out of a bad trade that way because it could easily be more expensive once all the staff time and legal advice is added on).

    Clarification: the bank doesn't do anything for the account holder.

    The banks can do whatever it likes in acting for itself, ranging from hiring call center staff to phone up debtors and hassle them to hiring $2000/hour lawyers to drag people through the courts to get the money back. What it can't do is say "Boom, gotcha! You're a day late and that'll be an extra fifty bucks."

    That's liquidated damages and contracts containing provisions for them can't be enforced where they're applied solely to punish to non-performing party. They don't have to be for a specified amount, but they're required to be in the general ball-park of how much the aggrieved party is out by).

    50c is actually about what it costs in data processing to edit a customer file and change the balance from $20 to $-30. Some in-house entries might be cheaper, but some others routing through third party providers like VISA and Mastercard are more expensive.
     
  13. Big A.D.

    Big A.D. Well-Known Member Silver Stacker

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    But the bank isn't even necessarily extending credit for any longer or for more than was contracted.

    The way they were running things before, if I have a $5000 limit on my credit card and I spend $1000 on it, I might have a "minimum payment" of, say, $50 to make next month. If I'm a day late, I'll get hit with a $50 "late fee".

    The $1000 principle, the $50 "late fee" and any interest I might rack up in the mean time is still well below the agreed $5000 credit limit. The nature of the credit facility is that it's ongoing and the bank will happily capitalize the interest for me too.

    They just got greedy and wanted an extra fifty bucks on top.

    700-odd years worth of legal history sees things differently. Generally, I agree with you, however the law says that contractual penalties have to be fair.

    Well, they could keep their loan rates low and their deposit rates high by selling crack to school children. That would be illegal too.
     
  14. Shaddam IV

    Shaddam IV Well-Known Member Silver Stacker

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    I think that the issue is that the bank does not call it a penalty. They call it an "administration fee" and under current Australian law the fee has to reflect the actual admin cost. Being that it is almost all completely automated on their computer systems and no human has to be involved the fee can be argued as being well above the actual cost of processing that fee.
     
  15. Big A.D.

    Big A.D. Well-Known Member Silver Stacker

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    It isn't beside the point, it demonstrates that the "late fee" is punitive - a penalty that isn't imposed to cover costs, but to punish the account holder and basically show them who's boss.

    If the bank was genuinely out of pocket by $50 as a result of someone paying a day late, they're entitled to charge them $50, but charging $50 "because they can" isn't allowed.
     

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