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A federal judge on Friday refused to dismiss a proposed class action lawsuit accusing Citibank of fraudulently charging customers overdraft fees on debit card purchases.
Lead plaintiff Ronald Arendas sued Citibank in December 2011 after incurring a number of overdraft fees on debit card transactions that he claims were unconscionable, including a $30 overdraft fee from a gas-station purchase in 2008. According to his class action lawsuit, Arendas had enough money in his account for the purchase on the day of the transaction, but incurred the overdraft fee because the transaction didn’t post until months later.
Arendas says Citibank has charged him hundreds of dollars in similar overdraft fees since December 6, 2004, which he alleges are “representative of millions of dollars of overdraft fees Citibank wrongfully assessed and deducted from Citibank customer accounts.”
“Almost by definition, these fees disproportionately affect the poor, who are most likely to maintain low balances,” the Citibank overdraft fee class action lawsuit states.
More than 30 banks nationwide have been sued by customers over their overdraft-fee policies, which included reordering debit card transactions and deposits to maximize the number of overdraft fees they could charge. Hundreds of millions of dollars in class action lawsuit settlements have been awarded and many of the banks have since changed their policies.
Citibank urged U.S. District Court Judge Charles Breyer to toss Arendas’ Citibank overdraft class action lawsuit, arguing that “the plain terms of the client manual” that comes with Citibank debit cards require customers to provide written objections to fees within 30 days.
Judge Breyer dismissed this argument, however, saying this time limit was unreasonable.
“I think it’s unconscionable to enforce this against a consumer under these circumstances. That’s one reason I would deny summary judgment,” Judge Breyer said. “I don’t have to give an opinion as to [how many days’ notice] would be reasonable. I am just saying this is unreasonable.”
Arendas is seeking to represent thousands of Citibank customers who were charged similar overdraft fees between December 6, 2004 and the date the class is certified.
The Citibank Overdraft Fee Class Action Lawsuit case is Arendas v. Citibank Inc. et al., Case No. 11-cv-06462, in the United States District Court for the Northern District of California.
Arendas is represented by Richard D. McCune Jr., of McCuneWright LLP.
UPDATE 2/20/14: Citibank has agreed to pay a $7.9 million class action settlement to resolve the litigation. More details can be found here.
All class action and lawsuit news updates are listed in the Lawsuit News section of Top Class Actions
One thought on Judge Won’t Toss Citibank Overdraft Class Action Lawsuit
As Executor of my mother’s modest estate I was trying for most of a year to find out why CitiBank was charging her money for having money deposited at their bank. Turns out, I could never get an itemized statement OR a cogent explanation, it was some sort of fee for a line of credit. In round number she had $30K in the account, a line of credit of $1500 and was paying $400 a year if interest. Not only is that crazy to charge somebody interest for having a positive balance but also usurious on whatever the “line of credit” represented. Could only close the account in frustration. Hence the bank was willing to loose a fairly large deposit to avoid refunding fees they should have never charged. Amazing how they stay in business. Oh yeah, our Government keeps them in business–I forgot. IF anybody has a class action going with something similar please include me, thanks!