Bank of America had been facing a proposed overdraft class action lawsuit alleging that the banking giant charged unfair overdraft fees, but an Illinois federal judge dismissed the claims at the end of March.

The plaintiff, Illinois resident Matthew S., alleged in his proposed overdraft class action lawsuit that Bank of America unfairly and improperly charged him overdraft fees on debit transactions made with cards from Target and other retailers that had been linked with his Bank of America bank account. According Matthew, the contract he’d signed with Bank of America included a promise of no overdraft fees on debit transactions. He claimed that this stipulation should also apply to debit cards from retailers that had been linked with his account with Bank of America.

Matthew filed his lawsuit as a proposed class action, noting that many others were likely in a similar situation.

Bank of America moved to dismiss these allegations, and U.S. District Judge Charles P. Kocoras granted motions to dismiss the five claims the proposed overdraft class action lawsuit had brought forward. Three of them—breach of implied covenant of good faith and fair dealing, conversion, and unjust enrichment—were dismissed with prejudice. But regarding the two other claims that were dismissed—breach of contract and unconscionability—Matthew was given thirty days to amend them, after which the entire case would be dismissed.

Judge Kocoras interpreted the contract in question as applying only to debit cards issued by the Bank of America, rather than debit cards issued by retailers.

“Given that BANA only agreed to refrain from charging overdraft fees for everyday non-recurring transactions made with these types of cards, [plaintiff] cannot state a breach of contract claim based on overdraft fees in connection with decoupled debit cards.”

While Matthew argued that the overdraft terms were unclear in the contract, the judge disagreed, also noting that the plaintiff had not specified which part of the contract had been unclear.

“[Plaintiff’s] failure to read or understand a clearly defined term of the Contract is not grounds to void an otherwise valid contract due to unconscionability,” said Judge Kocoras.

Unfair Overdraft Fees

Banks and credit unions often offer their customers overdraft protection programs, under which they would be able to complete transactions when they otherwise would have hit the bottom of their account, in exchange for an overdraft fee. The average overdraft fee at banks is about $35, according to NerdWallet.com, though at credit unions this fee might be substantially less.

Every year, the banking industry rakes in billions of dollars off of overdraft fees alone.

Many consumers have complained of deceptive overdraft practices. One of these practices is when a bank reorders transactions, processing them from largest to smallest rather than in simple chronological order. This makes it so that each transaction is more and more likely to push an account into overdraft, and because overdraft fees compound with each overdrawn transaction, this process incurs the largest amount in overdraft fees possible.

Consumers have also reported facing unexpected overdraft fees or unfairly high fees.

Filing an Overdraft Class Action Lawsuit

A number of major financial institutions have faced class action lawsuits over unfair overdraft fee practices. In some cases, these lawsuits ended in substantial settlements.

Filing a lawsuit can be a daunting prospect, so Top Class Actions has laid the groundwork for you by connecting you with an experienced attorney. Consulting an attorney can help you determine if you have a claim, navigate the complexities of litigation, and maximize your potential compensation.

If you have faced unfair overdraft practices, you may be able to join this class action lawsuit investigation.

The Overdraft Class Action Lawsuit is Case No. 1:19-cv-05223, in the U.S. District Court for the Northern District of Illinois.

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.