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Consumers are starting to challenge financial institutions that are charging more than one bank returned item fee when they attempt to process the same transaction multiple times.
Electronic payments for video streaming services, gym memberships, or electronic fund transfers from PayPal are among the items the bank may reject more than once, and each rejection brings another bank returned item fee.
Many financial institutions set their returned item fees at around $30, which is charged when the institution declines to pay a transaction due to lack of funds in the customer’s account. A bank returned item fee can add up, however, if it hits the account multiple times.
After the initial attempt to process the payment, the bank may try to process the payment again a few days later. If it returns the payment again due to insufficient funds, the customer may incur another bank returned item fee. Some financial institutions have no limit on the number of times the transaction will be attempted or the number of fees that can be charged.
Controversy Regarding Bank Returned Item Fee
Bank customers allege their banks are abusing the practice of charging returned item fees, also known as non-sufficient funds fees.
Even though financial institutions can legally charge a bank returned item fee, customers take issue with the bank charging multiple fees for repeated attempts of the same transaction. In some cases, they argue that the bank that charges more than one returned item fee per transaction violates its own policy.
In one lawsuit, Fifth Third Bank is accused of charging more than one $35 bank returned item fee on the same transaction even though its own contract says each transaction can only incur one such fee.
Another customer alleges Bank of America charged both a $35 return item fee and a $35 overdraft fee on the same transaction. The plaintiff claims this is a violation of the bank’s own contract that prohibits both types of fees from being placed on the same transaction.
Federal law prohibits banks from imposing both an overdraft fee and a non-sufficient funds fee on the same transaction. Still, some banks limit the number of each type of fee they can charge in one day. U.S. Bank says they limit overdraft fees to four per day, but also limit bank returned item fees to four per day. A U.S. Bank customer could potentially incur eight fees in a single day.
Banks make billions of dollars by charging overdraft fees, bank returned item fees, out-of-network ATM fees, and other charges related to doing business with your money. The Consumer Financial Protection Bureau (CFPB) sees consumers with the lowest incomes paying the most fees, despite regulatory changes that have targeted unscrupulous banks.
Even though the majority of bank customers know they can be charged a bank returned item fee for a transaction that doesn’t process due to insufficient funds, few customers expect the bank to charge multiple fees on a single transaction. The questionable practice has prompted several customers who believe the multiple fees are unfair to file class action lawsuits against the offending banks.
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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