The Watchdog: Local senior needs help facing bank

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Problem: A drafty bank

Mary McNamara, an 80-something Severna Park resident, said she feels overwhelmed by her bank fees.

McNamara opened an account to share with her adult son, who lives in another state. She said he recently was laid off from his job and has a baby with health problems, so she wanted to make sure they had some financial security. She said she put deposits in the bank regularly.

About four months ago, McNamara said she stopped receiving bank statements in the mail. Then, when her son tried to make a withdrawal, a teller alerted him the account had incurred almost $900 in overdraft fees.

"I had been making deposits," she said. "I had no idea I was in arrears."

The bank staff said her notices had been returned to them as "undeliverable."

"Why didn't they call me?" McNamara said, adding that she had no idea that any of her mail had not been delivered; rather, returned to the original sender.On top of that, McNamara wanted to know why she wasn't afforded some insurance against overdraft penalties as she had been signed up for a special program at her bank called "overdraft protection."

At this point, McNamara said she doesn't feel "mentally equipped" to go toe-to-toe with her bank manager to contest the fees.

"I want to pay my bills," she said, "but I just didn't know."

Solution: Protecting her interest

Unfortunately, the Watchdog knows McNamara's situation is not unique. Many consumer groups believe bank-overdraft penalties are needlessly predatory. Many of these groups are now asking bank regulators for stricter policies to wrangle in overdraft programs.

McNamara also is not alone in believing "overdraft protection" will prevent the penalty charges. Typically under these programs, account holders are still assessed a fee on bounced checks and transactions exceeding their balance, and some banks also set limits on how much they will let a client borrow.

And if the account holder doesn't replace the overdrawn money and the fees they've been assessed within a month's time, the individuals are usually charged interest on the debt.

According to a recent Federal Deposit Insurance Corp. study, almost 90 percent of banks do not tell their clients that a purchase they are about to make will overdraw the account and initiate a fee; 70 percent don't notify the customer when an ATM withdrawal will cause an overdraft.

For McNamara's particular bank, starting in January, it will change its practices for debit card and ATM withdrawals to not charge fees for overdrafts totaling $5 or less in a single day. Currently, the bank has no limit on the number of fees it charges per day. That will change to a maximum of four per day next year.

Consumers can compare bank overdraft practices and prices online by looking at the FDIC's study at www.fdic.gov/bank/analytical/overdraft/.

Anecdotally, many consumers have had success getting forgiveness on overdraft charges by contesting the fees with their bank's branch manager. It sounds as though what McNamara needs is an advocate who can help her with mediation.

So the 'Dog called the county Department of Aging and Disabilities. Spokeswoman Mary Felter said though the county used to offer short-term advocates for seniors, the program has since dispensed with these services and now only provides advocates for long-term casework.

But Felter said seniors in need of this type of assistance should call the Maryland Access Point, an information call line for seniors and residents with disabilities at 410-222-4257, so that the staff can try to match them with other resources that may be available in the area.

Also, the state Department of Labor, Licensing and Regulation oversees banking institutions in the state through its Division of Financial Regulation. Through this division, consumers who need help disputing charges from their banks also can receive some assistance, if their bank is registered in Maryland. The division can be reached at 410-230-6077.

Consumers should be aware of steps they can take to prevent overdrafting issues. The FDIC provides tips to avoid these fees online at http://federalreserve.gov/pubs/bounce/default.htm.

The Watchdog will follow up with McNamara to find out how she resolves the issue.

E-mail complaints to Elisha Sauers at esauers@capitalgazette.com or call her at 410-280-5932. Remember to leave your name and daytime phone number, and she'll get back to you as soon as possible.