Legal Processing Fees: Why Do Banks Charge Them?
If you look at the fine print or the fee schedule for your checking and savings accounts, you might notice something called a legal processing fee.
If you’ve never had to pay one, you might wonder what a legal processing fee and when they’re charged?
Legal processing fees are charged when the bank has to do something to your account based on a court order or legal action.
As a rule of thumb:
If the bank’s legal team needs to step in to review a court order or your account, you’ll pay the fee.
You might incur this fee if you’re ever subject to wage garnishment, child support, liens, or levies.
This article will cover everything that you need to know about legal processing fees.
Why Do Banks Charge Legal Processing Fees?
Banks charge legal processing fees when they have to investigate or take action on an account based on a legal order.
When your bank receives the order, it doesn’t immediately comply and release your information or money. It wants to verify that the order is legitimate and legally binding.
Remember, banks have a vested interest in keeping your money in your account.
They want to keep you happy as a customer and want your account balance to stay high. They also want to make sure that they aren’t being defrauded by someone who has created a fake court order to try to steal money.
To ensure that any court order that the bank receives is legitimate, the bank employs a team of legal experts.
These experts review any legal orders the bank receives and determines whether they are real and if so, whether they’re legitimately enforceable.
As anyone who has worked with a lawyer before knows, legal advice isn’t cheap.
The bank has to pay their legal team for their service. A legal processing fee is a way for the bank to charge its customers for the cost of reviewing legal orders related to their accounts.
These fees may be charged whether or not funds are removed from your account. The bank’s legal team spent time reviewing your account whether or not it moves your money, so the cost is still incurred.
Typically, legal processing fees range from $75 to $125, but it can vary from state to state based on regulations.
Compare Legal Processing Fees at Major U.S. Banks
|Bank||Legal processing fee||Notes|
|Bank of America||$125||(or such other rate as may be set by law)|
|Chase||Up to $75|
|Wells Fargo||$125||The Bank will assess no more than a total of $250 in legal fees per account, per calendar month.|
|PNC Bank||$100||Fee if funds from the account are frozen or seized under orders. PNC's actual attorney fees and court costs, when applicable, are added|
|BB&T||Up to $125|
When Are Legal Processing Fees Charged?
Legal processing fees are charged when a bank has to review or take action on your account based on an order from a court.
This can be anything from responding to a subpoena for your bank records to the IRS garnishing your wages to pay back taxes.
Some examples of when legal processing fees will be charged are:
- Tax liens
- Child support
- Wage garnishment
Can You Get the Fee Waived?
Legal processing fees can be expensive and they often apply to people who don’t have much money in the first place.
If you’re dealing with wage garnishment or unpaid child support, you might have trouble covering a $100 legal processing fee.
You can work with your bank to try to get the fee waived, though there is no guarantee that this will be possible.
Usually, banks will be hesitant to waive the fee because they’ve already paid for the legal team to review your account, regardless of whether it took action based on that review.
If you want to try to get the fee waived, start by reaching out to your bank. It can’t hurt to simply ask if the bank will be willing to waive the fee.
Be polite, but don’t be afraid to provide some supporting arguments for why the bank should waive the fee.
If you’re a long-time customer of the bank or have a large balance that can help you when you’re making your case.
If you were charged a legal processing fee and you’re not sure why you should definitely contact your bank for more information.
It’s very possible that the bank charged the fee to your account accidentally or review your account by mistake when it received a legal order for another person’s account.
If the bank reviewed your account in error, it can be much easier to get the fee waived. Point out the mistake and the bank should waive the fee.
If the bank did the legal review for legitimate reasons, it can be difficult to get the fee waived.
Still, there’s no harm in asking if the bank can reduce or waive the fee. The worst that can happen is that the bank will say no.
Legal processing fees happen when your bank has to take action or review your account because of a court order or other legal matter.
These fees can be expensive and they’re difficult to avoid or get waived.
Understanding what they are and when they’re charged can help you be prepared for them.