A proposed class action Capital One overdraft fees lawsuit initially dismissed was recently brought back by a federal appeals court. According to the Capital One overdraft fees lawsuit, the banking giant imposed illegal overdraft fees on its customers.

“Capital One illegally extracted overdraft fees for purchases the were made when consumers had enough funds in their accounts,” said a lawyer for the lead plaintiff.

According to the Capital One overdraft fees lawsuit, the company illegally charged overdraft fees at the time of settling transactions, rather than at the cash register, when the transactions were authorized.

Then, according to the plaintiffs, the bank processes the fees out of chronological order. This can mean that customers end up being hit with a barrage of fees rather than just one.

For instance, if a customer makes several small purchases and later one large purchase that overdrew her account, they would be charged only one overdraft fee if processed chronologically. If the transactions were processed out of order, a new overdraft fee would be incurred on each successive purchase — however small — that overdraws the account.

Overdraft fees, when compounded like this, can cost consumers a substantial chunk of money.

The Capital One overdraft fees lawsuit had been dismissed by a lower court judge. The U.S. Court of Appeals for the Second Circuit revived a breach of contract claim, as well as a claim under New York consumer protection law.

What Are Overdraft Protection Programs?

Overdraft protection programs offered at banks and credit unions all across the country are meant to give customers extra padding in their accounts. For some, these programs can certainly be helpful. With overdraft protection in place, customers are able to have money transferred to cover transactions when they would otherwise have hit the bottom of their accounts, their card denied.

In exchange for this service, customers are charged a set overdraft fee. Overdraft fees are not a one-time thing and are incurred each time a customer makes a transaction that overdraws their account. Any additional transaction on an overdrawn account will in turn bring its own fee and compound with the others, adding up quickly.

Overdraft fees vary from bank to bank and from state to state, but the national average is currently around $31. Many banks charge more than this, and some have even been raising their overdraft fees.

Unfortunately, many bank customers have found that overdraft protection programs can end up costing them a lot of money. Several banks and credit unions are currently under investigation for allegedly using deceptive overdraft protection policies, and more financial institutions may be involved.

A variety of deceptive overdraft practices can be used to increase the amount of money a customer has to pay in overdraft fees. Other than transactions being processed out of chronological order to incur the most overdraft fees, customers may also be faced with issues like not being told all the detail of the program when they originally signed up for a bank account.

Some may not even have been told that they were able to opt out of an overdraft protection program.

Filing an Overdraft Fees Lawsuit

Capital One and several other banks and credit unions are under investigation for potentially using deceptive overdraft practices. If you have been affected by excessive fees or deceptive practices at your financial institution, you may be able to file a class action lawsuit like this Capital One overdraft fees lawsuit.

The Capital One Overdraft Fees Lawsuit is Roberts v. Capital One NA, Case No. 17-1762, in the U.S. Court of Appeals for the Second Circuit.

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