PNC among banks changing policies following lawsuits over overdraft charges


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PNC Bank customers who may overdraw their checking accounts are getting some good news.

Starting Dec. 7, Pittsburgh's biggest bank will stop reordering checks and debit card transactions from highest amount to lowest, a practice long decried by consumer groups as a sneaky way to maximize overdraft fees.

Under the new policy, checks and debit transactions will be processed in the order they come in.

Earlier this year, PNC agreed to pay $90 million to settle a federal class-action lawsuit that accused big banks nationwide of improperly manipulating debit card purchases by re-sequencing them and clearing them from high to low. That practice tends to drain an account more quickly and trigger the most overdraft fees, which now average about $35 a pop.

PNC spokesman Pat McMahon said the policy change was in the works before June's settlement agreement.

The class-action suit, which is pending in U.S. District Court in Miami and involves some three dozen big banks (about one-third have settled so far), does not cover the way the banks process checks, only debit card transactions. Nevertheless, PNC's new policy will extend to checks.

With the switch, PNC joins First Commonwealth, Northwest Savings and ESB among the region's top 10 retail banks in processing checks and debit card transactions in a manner favored by consumer groups.

Like PNC's new policy, Northwest Savings and ESB clear both types of transactions in the order they are presented, while First Commonwealth processes checks in order and debit transactions from lowest amount to highest.

Among the rest of the top 10 banks here:

• No. 2 Citizens agreed earlier this year to pay $137.5 million in connection with the class-action overdraft suit in Florida and to begin processing debit transactions in chronological order next year.

A spokeswoman wouldn't say specifically whether the change would extend to paper checks.

"We currently post all transactions high to low and are preparing to update our posting order next year," Citizens' Sylvia Bronner said in an email.

• No. 3 First National Bank of Pennsylvania, which currently processes checks and debt transactions from high to low, last month settled for $3 million in a separate overdraft lawsuit filed in federal court in Pittsburgh accusing it of unfairly manipulating transactions to boost fees.

Spokeswoman Jennifer Reel said it was too early to comment on how the bank might change its processing methods.

• Dollar Bank, the No. 4 consumer bank in the region, processes debit transactions in the order they come in, but reorders checks from high to low.

• No. 5 First Niagara declined to disclose its processes because of "proprietary reasons," spokesman Oliver Hays said.

A year ago, the bank told the Pittsburgh Post-Gazette that it cleared debit transactions in chronological order and re-sequenced checks from high to low.

• At No. 6 Huntington, checks and debit card transactions are rearranged high to low. On the plus side, the bank gives customers a 24-hour grace period to get an overdrawn account back into the black before assessing any fees.

• A spokesman for S&T, the No. 8 bank here, would not say specifically how the bank processed checks or debit transactions.

According to a full-page customer disclosure statement provided by the bank, transactions are assigned to a "posting group" and processed "in the order of priority of the posting group." The statement did not give details on the order or posting groups.

In the case of an overdraft, the statement said, "The total amount of such fees may be greater than if the items were paid in the order we receive them or by check number."

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Patricia Sabatini: psabatini@post-gazette.com, 412-263-3066.


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