Overdraft fees have been big revenue generators for banks since the 2008 financial crisis.

A report by the Consumer Financial Protection Bureau says the nation’s larger consumer banks collected about $11 billion in overdraft fees in 2015, accounting for eight percent of their profits.

The federal agency is now working on new regulations to address some of the ways banks levy these fees, which some consumer advocates and class action attorneys say can be unfair.

Some institutions’ overdraft practices have caught customers in a cycle of debt similar to what can happen with high-interest short-term payday loans.

Without realizing it, some bank customers may be subject to an overdraft protection plan that pays transactions using a high-interest line of credit. An overdrawn checking account that goes unaddressed can result in a pile of debt consisting of principal, interest and fees.

Another suspect practice was the subject of a series of class action lawsuits begun in 2009.

These claims accused banks of a practice known as reordering: paying transactions not in the order in which they were made but in order of largest to smallest. Paying transactions in that order depletes the account sooner which results in more subsequent transactions qualifying for overdraft fees.

Banks ended up paying over $1.1 billion as a result of that series of lawsuits. One of those banks, TD Bank, paid $62 million in settlements. Yet that bank was still reordering transactions as of February 2016. TD Bank uses the fine print in its checking account agreements to put customers on notice of the practice.

In a later statement, TD Bank said it planned to stop reordering transactions by April 2016.

Investigation Focus: Stillwater Bank

An ongoing class action lawsuit investigation is taking a look at the overdraft fees of many financial institutions, one of which is Stillwater Bank. According to its website, Stillwater Bank now does business under the name Bank SNB.  It’s a regional bank providing services in Oklahoma, Kansas, Texas and Colorado.

Claiming roots dating back over a hundred years, Stillwater Bank now holds $2 billion in assets. Stillwater Bank says its expertise is in commercial banking and treasury management services, focusing on industries like healthcare, commercial real estate and energy.

According to the Bank SNB Personal Account Disclosures effective October 9, 2015, the bank maintains a policy of honoring transactions that may result in an overdrawn checking account, but only at the bank’s discretion. The bank also reserves the right to change that policy without notice to the customer.

The disclosure says that customers of Stillwater Bank have the option of opting in to an overdraft protection that uses a line of credit or funds from a linked account to pay transactions that would otherwise result in an overdrawn checking account.

Stillwater Bank says that for consumer accounts it will not pay overdrafts or charge fees for ATM or debit card transactions, unless the customer has opted in to that service.

Stillwater Bank charges overdraft fees of $34 for each overdraft transaction, the same fee it charges for NSF transactions.

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