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A bank overdraft fee lawsuit against Bank of America (BoA) has ended with a negotiated $5 million dollar settlement. The proposed Class consists of more than 73,000 account holders who claimed that BoA violated its own policy by charging overdraft fees on non-recurring debit card transactions.
Case Background
The original bank overdraft fee lawsuit was filed in February 2019 by lead plaintiffs Kenneth D. Owens, Samantha Holley, Kara Gariglio, Nicoletta Pantelyat, Isabelle Scherer, Jonathan Tule, and Kelsea Wiggins. They claimed BoA charged them overdraft fees for transactions involving “gig economy” merchants such as Doordash, Eatstreet, Lyft and similar service providers.
The plaintiffs argued these overdraft charges were in direct violation of the depositors’ contracts with BoA, which promises that overdrafts or corresponding fees would not be charged for one-time, non-recurring debit card transactions. This policy had allegedly been in place since 2010.
The bank overdraft fee lawsuit states that over a five-year period between January 2012 and April 2017, BoA continued to authorize various kinds of debit card transactions into negative balances, causing account holders to incur fees of $35.
Overdraft Fees – a Lucrative Source of Bank Revenue
Overdraft fees are assessed when an account holder charges something to a debit card and the account does not have sufficient funds to cover the transaction, but the institution honors it anyway by advancing the funds. Fees for what amounts to a short-term loan have risen dramatically over the past two decades. According to an April 2018 Forbes article, such fees hovered around $20 prior to the year 2000. Since then they have risen by more than 40 percent. In 2017, U.S. banks and credit unions raked in $34 billion from overdraft fees, Forbes reported.
Usury Taken to an Extreme
Plaintiffs in the current bank overdraft fee lawsuit against BoA say that “for people living paycheck to paycheck … Bank of America’s overdraft fee practices not only damaged them monetarily but had a serious effect on their everyday lives.”
To get an idea of just how serious that effect is, consider what happens when a consumer overdraws his or her account by $24, resulting in a $35 overdraft fee. If it takes the consumer three days to make a deposit to cover the transaction, that amounts to an annual interest rate of 17,000 percent, according to consumerfinance.gov.
Under normal circumstances, this would be against the law, but labeling it as an “overdraft fee” rather than interest on a short-term loan provides a handy legal loophole.
Other Consumers File a Bank Overdraft Fee Lawsuit
The practice of charging overdraft fees has spawned a number of investigations and lawsuits against credit unions and banks in recent years. In a number of these cases, these defendants stand accused of failing to get depositors’ consent before charging overdraft fees. Legally, a customer must “opt in” to an overdraft protection program before the bank can legally charge such fees. But a number of plaintiffs in a bank overdraft fee lawsuit say they were enrolled in overdraft protection automatically, without their consent.
If you were charged overdraft fees or NSF fees by your bank or credit union that you believe are improper for any reason, the attorneys who work with Top Class Actions are ready to investigate these fees on your behalf.
Learn more by filling out the form on this page.
This article is not legal advice. It is presented
for informational purposes only.
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Join a Free Bank Overdraft Fee Class Action Lawsuit Investigation
If your bank and credit union has engaged in deceptive overdraft fee practices, you may have a legal claim. Fill out the form on this page now to find out if you qualify!
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PLEASE NOTE: If you want to participate in this investigation, it is imperative that you reply to the law firm if they call or email you. Failing to do so may result in you not getting signed up as a client or getting you dropped as a client.
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