A federal judge in Florida recently issued preliminary approval for a $24.5 million settlement in an overdraft fee class action lawsuit that accused BancorpSouth Inc. of altering overdrawn checking account information to improperly assess overdraft fees.

The approved $24 million payout will go to the members of the class and up to $5000 will do toward the settlement administration fees.

The amount reached in the settlement represents a 58 percent recovery for class members, which has been estimated to number about 191,000 individuals who are current and former BancorpSouth customers.

The BancorpSouth overdraft fee class action lawsuit is a part of the larger multidistrict litigation that accuses a number of banks of taking advantage of customers with improper overdraft protection practices when consumers have an overdrawn checking account.

Lead plaintiff Shane Swift initially filed the overdraft fee class action lawsuit against Bancorp in May 2010 in the Northern District of Florida, alleging that the bank had wrongly reordered his ATM and debit card transactions in order to increase the number of overdrafts on the account, leading to overdraft fees on each of the transactions on his overdrawn checking account.

In October 2010, Swift’s lawsuit was consolidated and transferred into the larger overdraft fee MDL. Following Bancorp’s unsuccessful bid to toss the lawsuit, the class of consumers who had overdraft protection fees imposed from Bancorp’s reordered transaction sequencing was certified in December 2011.

BancorpSouth attempted to move to decertify the class but the motion was denied. BancorpSoth also tried to appeal the ruling in the Eleventh Circuit, but that motion was denied as well.

Overdraft Fees at Credit Unions and Banks

Banks and credit unions are under increased scrutiny for their ever-climbing fees associated with the accounts they offer. Overdraft fees are among the most controversial as they have topped out at $38 at some banks and credit unions per instance of an overdrawn checking account, with multiple transactions potentially piling up in a day.

The average overdraft fees cost $27, and the range is between $10-38 to use overdraft protection on your account. BancorpSouth has one of the highest fees, currently reported at $36 per transaction.

Overdraft Fee Class Action Lawsuit Information

With increased public awareness of the potentially improper practices employed by banks and credit unions as well as increased oversight by the Consumer Financial Protection Bureau, more and more consumers are taking matters into their own hands in fighting against their financial institutions.

If you have paid overdraft fees at your bank or credit union, you may be able to join a free overdraft fee class action lawsuit investigation to see if you qualify to pursue legal action against your financial institution. An overdraft fee attorney can review your case for free and can help you determine if taking legal action is right for you.

The BancorpSouth Overdraft Fee Class Action Lawsuit is Swift et al. v. BancorpSouth Bank, Case No. 1:10-cv-000090, in the U.S. District Court for the Northern District of Florida.

The Overdraft Fee Class Action MDL is In re: Checking Account Overdraft Litigation, Case No. 1:09-mc-02036, in the U.S. District Court for the Southern District of Florida.

UPDATE: The BancorpSouth overdraft fee class action settlement is now open! Click here for more details!

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