Can I Dispute Overdraft Fees? Here Are the Steps

An overdraft fee is a charge imposed by a financial institution when a transaction exceeds the available balance in a checking account. The bank covers the transaction amount, acting as a short-term loan, and then applies a fee. These fees can be unexpected, leading many consumers to question if they can be reversed. This article guides you on how to dispute an overdraft fee with your bank.

Understanding Overdraft Fees

Overdraft fees occur when an account holder spends more money than is available in their checking account. This can happen through various transactions, including ATM withdrawals, debit card purchases, checks, or electronic withdrawals like automatic bill payments. Federal regulations, such as Regulation E, require banks to obtain affirmative consent, or an “opt-in,” from the consumer before charging an overdraft fee for ATM and one-time debit card transactions.

If a consumer does not opt in for overdraft protection on these transactions, the bank may decline the transaction without imposing a fee. However, for other transaction types like checks or pre-authorized electronic payments, banks are not required to obtain opt-in consent for overdraft fees. Financial institutions set their own fee amounts and policies, with typical overdraft fees ranging from $10 to $40, though many commonly assess around $35 per occurrence. Some banks have also implemented policies to reduce or eliminate these fees.

Preparing Your Dispute

Before contacting your bank to dispute an overdraft fee, gather all relevant information and documentation. This preparation helps build a clear case for your request.

You should identify:
The specific date and exact amount of each overdraft fee you wish to dispute.
The specific transaction or transactions that led to the overdraft, and their amounts.

Ensure you have your account number available and are prepared to provide personal identification. Collect any account statements or transaction history showing the overdraft fee and preceding transactions. If you had previous discussions with the bank regarding your account or the transaction, make detailed notes of these communications, including dates and who you spoke with. Consider any reasons or circumstances that contributed to the overdraft, such as a delayed deposit or a known error, as these details can strengthen your case.

Submitting Your Dispute

Once you have gathered all necessary information, you are ready to submit your overdraft fee dispute to your bank. Banks offer several methods for initiating a dispute:
Calling customer service.
Visiting a local branch in person.
Utilizing secure messaging within your online banking portal.
Writing a formal letter.

When contacting the bank, clearly state the purpose of your call or visit. Provide the specific details you gathered, such as the date and amount of the fee, the transaction that caused it, and any relevant circumstances. Maintain a calm demeanor while explaining your situation, focusing on factual information. Document every interaction with the bank, including the representative’s name, the date and time of the conversation, and any reference numbers. If you submit documents, retain copies. This log helps if further follow-up or escalation becomes necessary.

Following Up on Your Dispute

After submitting your overdraft fee dispute, the bank will review your claim. The timeframe for a bank to respond and resolve a dispute can vary, ranging from a few business days for simpler cases to 21 to 45 calendar days, or up to 90 days for a comprehensive investigation. During this period, some banks may issue a provisional credit to your account for the disputed amount while the investigation is ongoing.

Common outcomes include a full fee reversal, a partial reversal, or a denial with an explanation. If your initial dispute is denied, you have further options. You can request to escalate your case to a supervisor or a higher-level department within the bank. Review your bank’s policies regarding overdrafts and disputes, as this information can guide your next steps. If the issue remains unresolved after exhausting the bank’s internal processes, consider contacting a relevant regulatory body, such as the Consumer Financial Protection Bureau, for assistance.