Parties have reached a settlement ending an overdraft fees class action lawsuit against Bank of America.

The $66.6 million Bank of America overdraft settlement concludes a class action complaint filed in February 2016 by plaintiff Joanne F. At the heart of her complaint is the allegation that Bank of America routinely violated the National Banking Act (NBA) by charging customers an additional $35 fee if they failed to bring their negative-balance account back to solvency within a five-day period after an overdraft.

According to this lawsuit, the additional fee was levied over and above the initial insufficient fund fee of $35, which may or may not have brought the account into the negative-balance state initially. As argued by the plaintiffs, this action was in violation of the NBA because the charges exceeded the interest rate allowed.

Prior to agreeing to the Bank of America overdraft settlement, the megabank fought to have the litigation thrown out of court on the basis that the charge could not be considered interest per se, but rather standard flat accountholder fees.

In December 2016, U.S. District Judge M. James Lorenzo disagreed with other opinions on the issue and ruled that the extra charges are indeed connected to what could be called an extension of credit and thus be considered interest.

The megabank appealed this decision to the ninth circuit, but during the past month, the involved parties were able to come to an agreement with regard to the Bank of America overdraft settlement.

The Bank of America overdraft settlement was reached after three additional named plaintiffs were added to the suit in March 2017.

According to the legal documentation, the Bank of America overdraft settlement offers $37.5 million in cash settlement funds. These funds will be deposited into an escrow account established by the megabank within 30 days of the initial approval.

The remaining $29.1 million of the Bank of America overdraft settlement is for debt reduction payments. These payments are essentially refunds of extended overdrawn balance charges (EOBCs) to patrons whose accounts were closed during the relevant legal period while still owing this charge.

Also as part of the settlement agreement, Bank of America has agreed to eliminate the extra EOBCs to its patrons for a five-year period. It still intends to charge the standard $35 insufficient funds fee when applicable. This former action will come with automatic updates to associated credit agencies.

Bank of America is not the only bank that has come under scrutiny for these types of charges in recent years. A current class action investigation is looking into overdraft fee practices at HSBC, Capital One, and several other banks.

If you feel you have unfairly been charged additional fees for a negative balance or similar fees from one of these banks, you may qualify to participate in a free overdraft fees class action investigation.

UPDATE: February 2018, the Bank of America overdraft fee class action settlement is now open. Click here to learn more.

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