| Unauthorised overdraft fees. These are three words | | | | get this money refunded. |
| that worry every bank customer. An unauthorised | | | | Are Unauthorised Overdraft Fees Legal? |
| overdraft fee is the fee charged by a bank when | | | | There is some question as to the legality of |
| customers go over their overdraft limit. | | | | unauthorised overdraft charges. Penalty clauses (such |
| These fees can be very steep, with some banks | | | | as unauthorised overdraft charges) are illegal under |
| charging high premiums for customers who exceed | | | | breach of contract law. However, banks do have the |
| an agreed overdraft limit by as little as a few pence. | | | | right to claim damages from customers who breach |
| A recent consumer report suggests that bank | | | | their contract with the bank. To avoid going to court |
| customers paid more than £4 billion pounds in | | | | every time, most banks write these charges into the |
| unauthorised overdraft fees in 2004. | | | | contract. They are then able to raise those charges |
| Scale Of Overdraft Fees | | | | at regular intervals. |
| The BBC have reported that the seven major banks | | | | The banks see the unauthorised overdraft fee as a |
| charge unauthorised overdraft fees of £25 to | | | | fee for services rather than a penalty. This could |
| £38 pounds. Interest rates on the unauthorised | | | | alter the legal position. |
| amount can also be high. While some banks charge | | | | In many cases, it is the people who can least afford |
| under 8% interest, others have interest rates that | | | | it who suffer these overdraft charges. This can |
| hover around the 30% level. | | | | become a cycle, with some people having to pay |
| The banking industry has been slated for this practice | | | | unauthorised overdraft fees month after month. |
| by customers who feel they have been treated | | | | Help With Your Banking Rights |
| unfairly. The Office For Fair Trading has also criticised | | | | Consumers who want to find out more about their |
| banks for overcharging customers for unauthorised | | | | banking rights should check information from the |
| overdrafts. Late payment fees for credit cards have | | | | Bank Action Group, a self-help organisation for |
| also been criticised. The OFT suggests that late | | | | banking customers. This organisation can guide |
| payment fees for credit cards should be no more | | | | consumers through the lengthy process of recovering |
| than £12 and should only cover the | | | | unauthorised overdraft fees from their bank. |
| administration fee. | | | | Many organisations say that the banks should make it |
| Getting A Refund | | | | easier for consumers to see what charges might be |
| Consumers who feel they have been overcharged | | | | applied to their bank accounts. Until they do, |
| by their banks may be able to receive a refund if | | | | consumers should read the fine print as the terms |
| they go through a time consuming process. | | | | and conditions of each bank account contain |
| First of all, consumers can use the Data Protection | | | | information about charge that might apply. Finally, |
| Act to request details of all charges on their account | | | | when banks send variations of terms, it is useful to |
| over the past six years. Next, they need to inform | | | | read these to see what new conditions might apply. |
| the bank that they intend to sue in County Court to | | | | |