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Published May 08 2012

Gate City Bank says lawsuit alleging fee-producing debit shuffling 'simply incorrect'

FARGO – Gate City Bank has filed a response to a federal class-action lawsuit claiming the bank manipulates debit and check processing so customers will incur overdraft charges.

In its response filed Monday, the bank denies it unfairly assessed overdraft and non-sufficient funds fees to plaintiff Amber Pieloor of Underwood.

Pieloor alleges the bank accumulates debits and credits throughout the day and then re-sequences them at the end of the day, posting debits first. Her lawsuit also claims the bank re-sequences transactions from different days as if they occurred on the same day and re-sequences debits so they’re paid “high to low,” increasing the likelihood of overdrafts.

In its response, the bank’s attorneys call the allegations “simply incorrect” and describe how transactions are processed:

• Transactions originating with paper checks are processed as they’re received from the Federal Reserve Bank or the Bank of North Dakota.

If more than one check is received in the same batch file, the checks are processed in ascending numerical order. For example, check No. 100 would be processed before No. 101.

Checks converted to electronic payments and received in the same batch are sequenced based on the transaction amount from low to high, not from high to low, the bank says.

• Transactions received from third parties, including other banks and companies that handle such activity, are processed in the order they’re received using Gate City’s online, real-time system.

Point-of-sale and ATM transactions authorized with a personal ID number “are posted immediately,” as are those processed over the bank’s teller line or via Gate City’s online banking site or automated phone system, the bank says.

“During any particular day, a Gate City customer may have a higher debit charged to their account before a lower debit is charged,” the response states. “That results simply because the debits were received in that order from a processor, bank, or other third party.”

Gate City is asking the court to dismiss Pieloor’s complaint with prejudice, deny the class-action certification and award costs to the bank “as the court deems appropriate.”

Readers can reach Forum reporter Mike Nowatzki at (701) 241-5528