Consumer complaint received 2022-10-16
Product: Checking or savings account — Checking account
Issue: Problem caused by your funds being low — Overdrafts and overdraft fees
Company: KEYCORP (OR)

Key Bank just issued a press release touting their new " consumer-friendly '' overdraft terms ( https : //www.key.com/personal/promo/new-overdraft-terms.html ). I assumed that this policy change had fixed Key 's most flagrant fee issue for consumers, which is charging overdraft fees based on pending electronic authorizations which are not real charges. However, on XX/XX/XXXX, I was again charged an overdraft fee even though I had sufficient funds in my account, as shown on the attached document. 

After deducting the item for which I was charged an " overdraft '' fee, my balance was {$180.00}. Key charged the fee by deducting pending electronic authorizations from my available balance, even though only {$52.00} of these pending charges were actually made by me ( meaning I truly had {$120.00} left in my account ). 

Of the remaining amount that Key counted toward my " overdraft '', two of the authorizations were duplicates of a transaction that had already posted ( {$4.00} and {$4.00}, electronically authorized multiple times on XX/XX/XXXX for my monthly XXXX XXXX subscription, which posted on XX/XX/XXXX using a 3rd authorization ). The other was an authorization of {$150.00} for an order I placed with XXXX, which I immediately realized had defaulted to the wrong card and changed the charge to my XXXX ( where it posted XX/XX/XXXX ). 

The problem with the way Key handles pending transactions is that online commerce has changed dramatically since banks first imposed overdraft fees. In the past, transactions posted to the bank when they were paid. But with electronic authorizations, banks receive advance notice of many transactions that will never result in actual charges to the customer 's balance. Examples include those currently on my account ( duplicate authorizations and changed payment methods ), orders cancelled prior to shipping and, sometimes, attempts to use a card that is declined but still sends a " charge '' notice to the bank. ( I was once charged a {$33.00} overdraft fee by Key when I still had over {$1100.00} available in my account, merely because an " authorization '' had posted for a transaction that had already been cancelled. ) Key 's new policy appears to have addressed the 'returned item charge ' fee that used to collect {$33.00} per transaction even though they never laid out a XXXX for the charges. Yet they are still charging " overdraft fees '' when customers have not used more than the funds they have deposited at the bank. Key is providing no service whatsoever for these charges, yet I would guess that " pending transactions '' are the biggest driver of them. 

The problem is that with online commerce and electronic banking, customers have no way of avoiding these pending authorizations. As shown in my case, they can be triggered by merchants ' payment systems erroneously duplicating authorizations or by an online order that defaulted to one payment method but is immediately changed to another institution. CFPB needs to address banks ' ability to recoup fees from consumers for these electronic authorizations, as they are providing no funds or service for the " transactions '' in question.