Consumers in an overdraft fee lawsuit MDL against the successor in interest to Royal Bank of Canada’s U.S. retail operations recently proposed a $7.5 million settlement to resolve the claims.

The settlement was recently brought before U.S. District Judge James Lawrence King. It resolves claims of improper overdraft fees levied against former customers of Royal Bank of Canada, claims that arose prior to a 2012 merger with defendant PNC Bank NA. The consumers informed Judge King of the settlement back in February but ended up returning to negotiations and only recently finalized the settlement terms.

Under the overdraft fee lawsuit settlement, PNC Bank has agreed to pay $7.5 million as successor in interest to Royal Bank of Canada. The settlement will benefit plaintiffs in the overdraft fee multidistrict litigation and other Royal Bank of Canada customers who allege they were charged excessive overdraft fees between October 2007 and March 2012.

While PNC Bank is on the hook for the settlement payment, its overdraft practices were not at issue in this litigation.

Both parties have agreed to the settlement as the best possible solution; the approval motion notes that the consumers have so far been successful in avoiding dismissals and forced arbitration. However, the settlement class counsel has determined that they will likely face more arbitration disputes which could derail the claims.

“Under the circumstances, settlement class counsel appropriately determined that the benefits of the settlement outweigh the gamble of continued litigation,” the customers argue. “Even if plaintiffs prevailed at trial, any recovery could be delayed for years by an appeal.”

Judge King will determine whether or not the settlement deserves preliminary approval or if the consumers need to go back to the drawing board.

Overdraft Fee Lawsuit Claims

In the many lawsuits consolidated in the overdraft fee multidistrict litigation, consumers claimed that Royal Bank of Canada reordered transactions in a way that allowed them to charge fraudulent overdraft fees to consumers.

Even in 2013, Forbes noted that reordering transactions was a way that banks were maximizing overdraft fees. Since overdraft fees provide a large form of revenue for banks, the organizations allegedly engage in the behavior to increase their profits. The practice even caused the Consumer Financial Protection Bureau to launch an investigation to determine the legality of reordering transactions.

Since then, countless overdraft fee lawsuits have been launched against companies that have allegedly reordered transactions to maximize fees. Customers of these banks claim that the reordering practices are deceptive and, in some cases, violate account agreements.

In August 2018, two senators from New Jersey and Ohio partnered on a bill to rein in overdraft fees and limit deceptive behaviors. The Stop Overdraft Profiteering Act of 2018 would reportedly limit banks to charging only one overdraft fee per month and up to 6 in a calendar year.

Senator Cory Booker said that the act “would also mandate that banks post transactions in a manner that minimizes overdraft and nonsufficient fund fees (oftentimes, banks reorder transactions in such a way as to maximize overdraft fees, which can mean, in some cases, that the consumer faces multiple charges).”

While legislators work on pushing beneficial laws through the government, overdraft fee lawsuits offer consumers a way to take matters into their own hands.

The Overdraft Fee Lawsuit is from In re: Checking Account Overdraft Litigation, Case No. 1:09-md-02036, in the U.S. District Court for the Southern District of Florida.

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.

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This article is not legal advice. It is presented
for informational purposes only.