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Appeals court issues ruling in Wells Fargo overdraft case

FRANCISCO (12/28/12)--The U.S. Court of Appeals for the Ninth Circuit has reversed in part a lower court's order requiring Wells Fargo Bank to cease charging overdraft fees based on its posting debit-card transactions in high-to-low order.

The San Francisco-based court also reversed the lower court's order that Wells Fargo pay $203 million in restitution to its debit card customers.

The lower court had held that the bank's actions were unfair and fraudulent under California's Unfair Competition Law.

The appeals court reversed in part, but upheld claims that Wells Fargo had affirmatively misrepresented to its customers its posting order of debit card transactions. The court also remanded in part for the district court to determine the appropriate relief regarding the claims it upheld.

"The bank was shielded by the National Bank Act and implementing regulations regarding its decisions to post debit items in a particular order," Mary Dunn, deputy general counsel for the Credit Union National Association, told News Now. "However, the court determined that the California Unfair Competition Law was not pre-empted regarding the claims for fraudulent misrepresentations."

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