A federal judge recently approved a $410 million settlement in a class-action lawsuit against Bank of America. The suit involves overdraft fees imposed on debit card customers over the past decade. Many of these customers have expressed displeasure with the decision to settle the lawsuit. The typical fee was $35 per overdraft occurrence. Despite the settlement, some have expressed doubt about the financial institution’s intentions.
Plaintiff Joanne Farrell sued the bank after she was overdrawn five days in a row.
Farrell was charged $35 for every overdraft she experienced. At the time, her account balance was negative between $2 and $284. If the charge were legal, the bank would be liable for interest on the amount. The court ruled that the fees were usury and a violation of federal law. While Bank of America argues that the law distinguishes between overdraft fees and interest, the bank contends that they are charging customers for services they don’t have.
The bank was ordered to cease charging extended overdraft fees for five years, saving customers $1.2 billion. The company has a policy of penalizing consumers $35 for the first offense and another $35 for remaining overdrawn for five days. Attorneys for the plaintiffs said the second charge is an illegal, predatory interest. The first charge provides service, honoring a check, but the second fee does not.
Bank of America was forced to stop charging extended overdraft fees.
The company claims this will save its customers millions of dollars. This policy is illegal under the U.S. federal Consumer Financial Protection Act, and it was determined that the policy is unfair. A third-party lawsuit was filed against the bank on behalf of Farrell. The company agreed to the settlement, which will result in a change in its policies.
While Bank of America has agreed to settle the class-action lawsuit, the company still owes consumers hundreds of dollars in overdraft fees. A lawsuit filed in federal court in 2017 versus Bank of America found that the bank violated federal law by charging overdraft fees on debit card users. In the past, the bank has charged thousands of customers. The settlement also required the bank to give back the money they took from consumers.
A bank of America overdraft lawsuit filed in the U.S. has been settled for more than $410 million.
The settlement will compensate 13 million people who were charged excessive overdraft fees between 2001 and 2011. For instance, a $35 fee can easily cost you as little as $105 in overdraft charges. A Bank of America overdraft lawsuit has the potential to pay as much as $318 billion.
The Bank of America overdraft lawsuit was filed by a group of consumers. They filed a lawsuit against the bank over excessive overdraft fees that the bank charged on their debit cards. According to the suit, the company was charged overdraw fees for every transaction between negative and positive amounts. This was unconscionable and discriminatory. Those customers were not informed about the overdraft charges, so they were charged for those transactions.
The court agreed to the terms of the settlement and a new regulation prohibiting the bank from charging overdraft fees.
However, many people are opposed to the settlement due to the fee structure. While this may appear to be a significant reduction, the bank has already made the deal with the government. In the end, the settlement could help customers who were wronged by these fees. It is important to note that the Bank of America overdraft lawsuit is still pending.
In January 2017, a Pennsylvania resident wrote a check for $75 to a store. But the bank refused the check and charged her with an overdraft fee of $35. In contrast, the bank was able to pay the check without the overdraft charge. She sued the bank for $35 and is currently seeking damages of $8.50. The court also ordered Bank of America to stop charging overdraw fees on their customers.