Compounding Returned Payment Fee Can Top $100, Say Bank Customers

Banks are legally allowed to charge non sufficient fund fees on recurring transactions such as gym membership, subscriptions, electronic bill payment, and electronic transfer. However, recent allegations suggest that banks may be hitting consumers with more than one returned payment fee for transactions made with non sufficient funds.

Returned payment fees are charged when a recurring transaction exceeds the amount of funds in an account. The fee, sometimes called a non sufficient funds fee, is usually around $30. However, banks are allowed to retry the payment a few days later. If this retry exceeds the amount of funds in the account, the bank may charge another returned payment fee. This process can happen over and over again, sometimes resulting in over $100 in returned items fees for just one single transaction, according to consumer complaints.

Although a returned payment fee may seem similar to an overdraft fee, as both fees involve transactions which exceed an account balance, the two are very different. An overdraft fee is only charged when consumers have opted into overdraft protection, while a returned payment fee doesn’t require opting into protection to be charged.

It is not illegal for banks to charge a returned payment fee, but consumers allege that banks are abusing this practice to generate more profit for themselves. This alleged abuse of power has led some consumers to file lawsuits against their banks, aiming to curb deceptive behaviors.

One Bank of America customer filed a Bank of America class action lawsuit in September 2018, alleging that the bank brings in billions of dollars every year by deceptively charging repeat returned payment fees.

“[Bank of America] seems to assert that each time an electronic payment is re-submitted, even though the consumer does nothing to facilitate this re-submission, it becomes a new, unique transaction worthy of new and multiple [non sufficient funds] or [overdraft] fees,” the class action states. “The problem with this argument is that neither [Bank of America’s] deposit agreement, nor its online banking agreement, contain this language.”

The returned payment fee class action, filed in North Carolina federal court, argues that Bank of America’s agreements indicate that only one returned payment fee will be charged for each transaction regardless of the number of times it is submitted. The plaintiff points out the fact that the bank’s agreements utilize singular rather than plural language when discussing a returned payment fee.

This lawsuit, along with other class action lawsuits over Bank of America fees, may result in a win for Bank of America consumers who were charged multiple returned payment fees, but it will not provide relief for customers of other banks. Customers of other banks may need to take legal action on their own or join a current class action lawsuit investigation. Speaking with a qualified attorney can help these consumers determine the best path for recovering compensation.

The Bank of America Class Action Lawsuit is Morris et al. v. Bank of America NA, Case No. 3:18-cv-00157, in the U.S. District Court for the Western District of North Carolina.

Join a Free Returned Item Fee Class Action Lawsuit Investigation

If you were charged multiple returned item fees (also known as NSF fees or insufficient funds fees) on the same transaction by your bank, you may be entitled to compensation.

Learn More