Bank of America Settles Excessive Overdraft Fee Lawsuit for $410 Million More than 13 million Bank of America (BAC) debit-card customers could see some repayment for excessive overdraft fees the bank charged between January 2001 and May 2011.

On Monday, a federal judge gave final approval to a $410 million settlement in a class-action lawsuit to compensate customers who were charged fees one or more times as a result of the bank's practice of posting debit card transactions from highest to lowest dollar amount, rather than in the order they occurred. The bank stopped doing that in May 2009.

Bank of America is far from the only one to have made that practice a policy. Suits have also been filed against J.P. Morgan Chase & Co. (JPM), Citigroup (C) and Wells Fargo (WFC), among others. The majority of banks have since changed their policies and no longer process debit-card charges that way.

The banking industry has defended the system as a way to help customers clear their largest bills first. But in reality, it was a golden goose for overdraft fees, which ranged from $25 to $35 per overdraft.

The practice was so entrenched that one consulting company developed specialized software aimed at helping banks facilitate the high-to-low ordering and to maximize consumer fees, American Banker reported in September. One financial institution -- Union Bank of California -- signed up and agreed to pay the consulting company a 20% cut of the fees. That bank reversed its policy last year and settled for $35 million last week.

For consumers, it can be hard to figure out the details of a bank's overdraft policy and its transaction processing system. Details may be available, but they're buried in the lengthy disclosure statements attached to the accounts, which run to an average of 111 pages. That's one reason there is a new push on Capitol Hill to streamline checking account disclosures to one page. Meanwhile, if you want to know how your charges are being processed, just call your bank and ask, consumer advocates advise.

Monday's settlement with Bank of America came with a steep price tag. The $123 million attorney bill means less than $300 million will be paid out to its customers. Those who are included in the settlement will see automatic credits to their account. Former customers will have checks mailed to them.

Affected customers can check www.bofaoverdraftsettlement.com for more information.




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April 12 2013 at 10:13 AM Report abuse rate up rate down Reply
vampyreincubus

So now BoA just charges 2 overdraft fees of $35 per overdraft. Sick of companies like this, you fine them and they just keep going about doing the shady scumbag tactics they were doing in the first place.

February 21 2013 at 6:04 PM Report abuse rate up rate down Reply
Jim

Does anyone know if the class action settlement included business accounts as well? I recieved a whopping $2.55 for my personal account. I know for a fact that i was screwed out of over 1500 bucks on my business account which I closed because of it...I can't seem to find anywhere if business accounts are included in the settlement...All i see is consumer account...anyone know? I've moved so many times that there is no way they would know where to send the check and since the account is closed they can't credit my account.

December 04 2012 at 10:00 AM Report abuse rate up rate down Reply
i7sas t

I have had an account with BOA for almost 10 years I had a personal account & business and here is a prefect example I had a business account with my mother she wasn't really great at tell me when she used the card for a purchase and i would be out with a client and I would get a insufficient fund paper and it usually said correct this in 5 days to clear up this so I went to the bank and put money into the account and then the next day I got another paper and went to tell them I paid the fee BS but come to find they then said my account was $60 dollars over drawn WTF I deposit money just a day ago and but the money i added to the account was put towards the fees not for the account and after this I closed the account because how can they let my account be go through if there is not funds to cover,,, so i was wondering when should someone get there share I got the post card saying i was among the people that will be getting a sliver of the pie lol anyone know exactly when ?

February 18 2012 at 3:58 AM Report abuse rate up rate down Reply
James Stein

Just as all big banks have by now decided to abandon debit card-related fees, they have started charging all kinds of other fees. Here are a few examples:

*Bank of America now charges a $5 card replacement fee ($20 for a rush delivery). Additionally, BofA's basic MyAccess checking account now comes with a maintenance fee of $12 a month, up from $8.95.
*U.S. Bancorp now charges 50 cents per mobile payment deposit.
*Starting in December, TD Bank will be charging $15 for each incoming domestic wire transfer.

The list goes on, but the point is that when the dust settles, banks will have managed to recover all revenues they lost when the debit interchange fees were slashed by the Federal Reserve in the wake of the passing of the Durbin Amendment and consumers will be footing the bill. Great job, Sen. Durbin! http://blog.unibulmerchantservices.com/debit-card-fees-may-be-gone-but-overall-banking-costs-go-up

November 14 2011 at 6:25 PM Report abuse rate up rate down Reply
dsarno281

$123 Million in attorney fees for this case??? I know who should be invesigated next.

November 10 2011 at 3:35 PM Report abuse rate up rate down Reply
enielsen33

Of course the attorneys are now stealing our money. No surprise there. How disgusting the attorneys take more than they deserve. There really is no justice for the consumer.

November 10 2011 at 3:06 PM Report abuse rate up rate down Reply
monkey luvzs

in over draft fees the most was 100

November 10 2011 at 3:06 PM Report abuse rate up rate down Reply
monkey luvzs

i would like to see how much i get back i had 2 bank accounts one from texas then here in washington lets see if i get money back because they sometimes still try charging that way

November 10 2011 at 3:05 PM Report abuse rate up rate down Reply
Sandra Yvonne

That was why I left that bank long ago.....

November 10 2011 at 2:45 PM Report abuse rate up rate down Reply