Banks' reordering policy persists

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It's been one of the most maligned of bank practices: reordering checks and debit card transactions to clear them from highest amount to lowest, a procedure decried by consumer groups as a sneaky way to maximize overdraft fees.

The practice triggered a number of lawsuits in recent years that resulted in a host of big banks dropping the policy, including Pittsburgh-based PNC Bank, which almost a year ago switched to processing checks and debit card transactions in the order they come in.

Among the rest of the top 10 banks in the Pittsburgh area, posting policies differ.

No. 2 Citizens and No. 3 FNB both continue to post transactions from high to low, even though both were sued over the practice.

A spokeswoman for Citizens said in April that the bank planned to stop re-sequencing debit card transactions from high to low. But as of this week, the Rhode Island-based bank hadn't made the switch. Citizens has declined to say whether the change would extend to checks.

Hermitage-based FNB -- which agreed in U.S. District Court in Pittsburgh to pay $3 million, less attorney fees, to customers hurt by its high-to-low policy -- has said it will not change its posting procedures.

Besides PNC, four other top 10 banks here also post checks and debit card transactions in the way most favored by consumer advocates. They include No. 6 Huntington, No. 7 First Commonwealth, No. 9 Northwest Savings and No. 10 ESB.

Columbus, Ohio-based Huntington switched away from high-to-low processing in February.

"Our posting order will now look more like a customer's check register," deposit products director Bryan Carson said.

He said the change required a "pretty significant" investment in system upgrades. But he said feedback from customers and negative publicity in the media over the industry practice convinced the bank that the cost was worth it.

At No. 4 Dollar Bank and No. 5 First Niagara, debit card transactions are processed in the order they come in. However, both banks reorder checks from high to low.

Checks are processed that way "to ensure that our customers' important large transactions clear first," First Niagara spokesman Oliver Hays said in an email.

Rob Jorgenson, spokesman for No. 8 S&T Bank, declined to say specifically how transactions were processed at the Indiana, Pa.-based bank. But he provided a lengthy disclosure statement that appeared to indicate the bank reordered transactions from high to low.

Mr. Jorgenson, who allowed that S&T's disclosure was "confusing," said the statement was "under review."

businessnews - yourbiz

Patricia Sabatini: or 412-263-3066. First Published October 12, 2013 8:00 PM


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