In 2002, an 18-year old community college student named Joshua Endres signed up for a Wells Fargo credit card, allegedly based in part on the promise made by a sales representative that it could provide overdraft protection for his Wells Fargo checking account. He “does not recall” seeing any of the disclosures and disclaimers from the bank which explained to him that there’s no such thing as a free lunch — that he would be charged a fee if he overdrew his checking account.
A few months after signing up, he overdrew his account, and was charged this fee. He discovered this a few days later, when he received his credit card statement. He was so outraged by this unconscionable behavior by Wells Fargo that he immediately cancelled the card. No, not really; this isn’t April 1st. In fact, he immediately used the card for four more years, incurring at least fifty more overdraft charges. Then he filed a lawsuit demanding restitution, and compensatory and punitive damages, alleging that nobody told him that he would be charged a fee.
McCune admits Endres could have done a better job of tracking his charges. Endres once exceeded his limit 62 times in a year, causing him to pay $620 in finance charges so he could obtain $1,115 in cash.
“It took a couple of years before he sat up and noticed,” McCune said. “The information was available to him.”
That’s his own lawyer admitting that.
There are other problems with the lawsuit, related to the statute of limitations and federal preemption of California laws, but the larger issue here is that someone would fail to read his credit card agreement, incur fees for four years based on the terms of the agreement, and then try to sue on the grounds that nobody told him what the agreement said about those fees. (Oh, did I mention that Endres’s lawyer seeks to turn this into a class action lawsuit?)
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/Snicker… “immediately used the card for four more years.”
We come for the content, but we stay for the style.
He “does not recall” seeing any of the disclosures and disclaimers from the bank which explained to him that there’s no such thing as a free lunch — that he would be charged a fee if he overdrew his checking account
Actually, I had one of those cards linked to my account. They were advertised as being “no fee” at least in the sense that if you overdrew your checking account, you would not be charged an overdraft fee. They did charge you fees in terms of interest, etc. So your “there’s no such thing as a free lunch, QED the kid is lying/mistake” is out of bounds.
Washington Mutual offers free checking – at least that’s how the advertise on television. If they charged me for checks, could I not claim that they violated their word? They also advertise an exemption from one overdraft fee resulting from writing a check with insufficient funds in the bank to cover the check.
Does a general “no free lunch” theory trump actual representations people make to the contrary?
First, someone should kick this kid’s a$$. Then, that same person should kick the ass of his counsel. Then, anyone who knows this kid should have his or her a$$ kicked for not first kicking his a$$ for playing along in this tomfoolery. And his counsel’s friends? Yep, they should probably have their a$$es kicked for the same reason. Sophomoric idea? Not as much as the suit.
Mike:
The problem is that the agreement clearly does say that there will be a fee.
“We will automatically transfer the exact dollar amount to cover the overdraft… A cash advance transaction FINANCE CHARGE of $10.00 will be charged each day an Overdraft Protection advance is made on the account.”
(I include the first sentence because the suit also claims he wasn’t told that the cash advance would be just sufficient to cover his overdraft.) I don’t think that something allegedly said or not said by the guy at the sign-up booth trumps the written agreement.
Nonetheless, had the plaintiff sued for a refund of his first month’s overdraft charge, this suit would have been unremarkable and I’d never have mentioned it. It’s the fact that he claims he thought it was free even after he had been notified regularly on his statement for four years that makes it absurd.
I wonder if there are a sufficient number of idiots who would count as being “similarly situated” (i.e. who rack up four years worth of these odious fees). Can’t imagine the patience it would take counsel to explain things to them.
Will there be a fee for the lawyer?
Since everything is done by computer, why the $10.00?
My credit card warned be of a large purchase (airline tickets), maybe it should also send separate warnings of overdrafts.
You are right, David, this matter is not worthy of litigation. Caviet Emptor is still excellent advice.
A bit of an aside, however related.
Here in the UK there is a current drive to claim any and all bank charges back from banks. Even though everyone taking an account agreed to get charges ($40-$80 per time) when going overdrawn/etc, a consumer campaign has been launched on the premise that the charges are illegal under UK law.
I myself have claimed charges back due to the power provided by the new consumer understanding of these laws.
I do however realise that the kid in the original article is a prime example of a legal waste of time, due to his own lacking in not reading his contract. I bet he wishes he was in the UK.
It’s a day later and I’m still miffed by this suit. I haven’t read the claims in the suit yet and I don’t plan on it. But in the spirit of contract basics, this seems so obvious that I suspect his lawyer MUST have an “ah-ha, gottcha” up his sleeve. Are they seriously expecting to compell a settlement such that WF would rather settle than defend?
Todd — here in MA, he could simply claim fraudulent inducement and get past the summary judgment bar.
Nothing remarkable here. People nowadays will say anything to avoid paying their voluntarily incurred debts. This sort of story gets presented in bankruptcy courts hundreds, or even thousands, of times annually. Unfortunately, bankruptcy judges come predominantly from the debtors’ bar, not the creditors’ bar, so this mischief is tolerated.
I think what Mike is saying is that credit card companies often claim in advertisements things that are simply not true when you read the fine print of the contract – which may be written so only a lawyer can comprehend it. Obviously many other businesses do the same. I think it should constitute fraud, but I don’t contribute nearly as much to legislators’ campaigns as these businesses do…
However, that’s relevant only to the first month or two of charges. Endres was informed of the truth about these charges with the first bill he received – and he opted to continue using this card and the overdraft protection for 47 more months. Unless he’s mentally incompetent and Wells-Fargo should have known it, there’s no question that he should be responsible for the rest of the bills.
At the risk of being somewhat unpopular, I have to say that I sympathize with the kid, though not necessarily with his lawsuit. I too signed up for such a service with Wells Fargo several years ago, and ended up in a dispute with the bank over possible fraud. Based on my own experience, I suspect that Wells Fargo employees are directed to “hard sell” these services, which may sometimes blur into illegal misrepresentation. Of course, Endres should have read the document fully before signing — but making false statements to induce someone into a contract is fraud, even if there’s written language which contradicts what was said aloud.
What really kills the seriousness of his claim, of course, is the fact that Endres kept using the card for so long. Even if the bank’s initial presentation was legally problematic — and I suspect that it may well have been — the fact that he continued without batting an eye suggests that he did not, in fact, feel defrauded until the bills finally came due.