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April 30, 2010

Customer sues Webster Bank on overdraft fees

A Middlebury customer of Webster Bank has filed a class action lawsuit, claiming the bank manipulates customers' account debits in a way that maximizes overdraft fees.

Kelly Mathena alleges in her suit filed on her behalf by West Hartford law firm Izard Nobel in Superior Court in Waterbury, Webster's hometown, that the bank routinely posts checks and ATM withdrawals against customers' accounts so they generate overdraft fees, even when accounts have a positive balance.

Mathena says Webster does this by re-ordering debit transactions from the highest dollar amounts to the lowest, to drain the accounts as quickly as possible and maximize fees.

She said in her suit that Webster could stop debits from going through when the account balance drops below a certain threshold, or at least warn customers they lack sufficient funds to cover the debits.

Her suit says the scheme is "extremely profitable'' for Webster and other U.S. banks, citing federal banking data that lenders rack up more than $27 billion in overdraft fees annually.

Mathena, who says she has been a Webster accountholder since 2003, wants the bank to repay overdraft fees to her and other Webster customers from whom it collected.

She also asks the court to award triple damages.

A Webster spokesman said Friday the bank hadnot yet seen the lawsuit and could not coment.

But, in general, the spokesman said Webster offers overdraft protection as a convienence to customers. He said the bank also clearly discloses overdraft fees to new accountholders.

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