Charging of a Return Item Fee Leads to New Lawsuit Against Capital One

Plaintiff Bob M. has initiated a return item fee class action lawsuit against Capital One Bank, alleging that the bank has unethically and illegally charged both non-sufficient funds fees and overdraft fees. Banks typically only charge these fees when an account does not have sufficient funds to pay a particular transaction.

The lead plaintiff in this return item fee lawsuit argues that the specific fee generation practice used by Capital One is deceptive and violates the bank’s existing contracts with consumers.

According to the plaintiff, documents established between Capital One and consumers enable the bank to charge one $35 NSF fee, or returned item fee, when it identifies that a customer’s account does not have appropriate funds inside the payer transaction. The bank will reject the charge from going through and charge an NSF fee.

The lawsuit against Capital One, however, claims that the bank generates hundreds of millions of dollars every single year at the expense of the most vulnerable customers.

The lawsuit explains that the lead plaintiff does not argue against the bank’s right to charge a single NSF fee and reject a transaction, but rather argues that the company has violated the express terms of their contract by assessing multiple NSF fees on single transactions.

The lawsuit argues that Capital One reprocesses a check for payment or an ACH transaction after it was initially rejected for insufficient funds in the account, meaning that the bank treats this as a unique or new item or transaction subject to a different NSF fee. The plaintiff argues that consumers are therefore subject to multiple $35 fees being charged deceptively as a result.

The lawsuit argues that an electronic item that is reprocessed after initially being rejected does not constitute new grounds for the charging of an NSF fee. Additionally, Capital One is allegedly breaching their contract when they charge more than one fee on the same item since customers are led to believe from the banking contract with Capital One that only a single NSF fee applies.

NSF, or nonsufficient funds, is the term applied to a checking account that does not have enough money inside to cover transactions attempting to be processed. Many banks charge an NSF fee when a presented payment is returned because of insufficient funds. 

If a consumer attempts to process the transaction and the financial institution does not cover the check or amount, this bounces back to the depositor’s bank. The consumer who attempted to write the check or process this transaction will be subject to a non-sufficient funds fee and if a check is also returned to the individual company that attempted to clear it, this could also add further charges.

Increasingly, however, consumers are arguing that banks are engaging in deceptive processes around these returned item fees, causing consumers to be charged multiple times without appropriate awareness or agreeing to do so in a contract.

The Return Item Fee Lawsuit is Case No. 1:19-cv-00473 in the U.S. District Court, Eastern District of New York.

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.

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