For most of us, the most common interactions we have with our bank come in the form of making purchases using the money in our account, but have you ever wondered how banks make money when their main job might seem to be just holding your money? A key way banks turn a profit is through fees. In fact, in 2019 the largest U.S. banks made a collective $11 billion in overdraft fees from consumers, according to The New York Times.

Unfortunately, this means that some banks may improperly or illegally assess a bank overdraft fee in order to increase profits. This sort of practice is exactly what plaintiffs allege in a South State Bank overdraft fee class action lawsuit filed against the financial institution.

South State Bank, based in South Carolina, opened in 1934, and now has 168 branches throughout North Carolina, South Carolina, Georgia, and Virginia. But according to consumer reports and attorney investigations, the bank’s overdraft fee practices may be unfair or even predatory, charging customers excessively.

If you feel you’ve been incorrectly charged a South State Bank overdraft fee, you may be able to request that the bank waive the fee.

South State Bank Overdraft Fee Overview

There are two things that may happen if you make a purchase that exceeds the amount of money in your bank account. First, your charge may simply be returned incomplete, at which point you will likely be charged a fee. However, if you have signed up for overdraft protection, the bank may complete your transaction and charge an overdraft fee.

At South State Bank, customers can choose from three types of overdraft protection. Each type comes with checking account fees.

The first overdraft protection program offered by South State Bank is called Overdraft Sweep. This program allows bank customers to link their checking account with another account, which allows the bank to “sweep” funds from one account to another to cover an overdraft.

The second overdraft protection option is an overdraft line of credit. Under this plan, when an account balance hits $0, the bank will transfer funds in $100 increments from a line of credit of $1,000 to $4,999.

Finally, a customer may choose to sign up for what the bank calls Automated Overdraft Privilege. In this case, if a customer attempts a transaction that exceeds the amount of money in the account, the bank will cover the shortfall up to a certain amount and then charge an overdraft fee.

How to Avoid an Overdraft Fee

The institution’s website states that “carefully monitoring your account is one of the best ways to avoid” an overdraft fee. The bank goes on to list the services that it provides account holders to help keep track of account balances.

First, online banking allows account holders to check their balance and make transfers from anywhere with internet access. Customers can also view their transaction history in order to see which items are pending and which have been completed. The difference between how pending and completed transactions are shown is often a cause for overdraft fee impropriety, according to plaintiffs in the South State Bank overdraft fee class action and other similar litigation.

Next, the bank recommends customers use mobile banking to instantly access their “real-time account balance,” as well as for transactions, including deposits. Mobile banking also allows consumers to transfer funds between accounts to make up for any low balances. Text banking, phone banking, and ATMs are also listed as ways to check your account balance and transaction history.

Finally, the bank suggests signing up for Daily Checking Account Balance alerts. This service is intended to allow customers to manage their money and avoid overdrafts.

If consumers continue to experience issues with overdraft fees, they may want to consider canceling overdraft protection enrollment. However, this could create another set of problems, including the possibility of having transactions denied. Bank Rate notes that opting out overdraft protection may be a good last resort as opting out legally forbids banks like South State from charging future overdraft fees.

Unfortunately, some consumers have complained that their banks or credit unions use deceptive measures to charge overdraft fees. If this happens, consumers may look into having the fees reimbursed.

Can You Get the Overdraft Fees Reimbursed?

If you would like to have a South State Bank overdraft fee reimbursed or waived, Possible Finance recommends contacting your bank and explaining the situation.

It’s important to be polite when interacting with bank representatives as Bonsai Finance reports that they may have been trained not to give in to rude callers. When you call, make sure to have all of your contact and account information on hand. Usually, the bank will prefer keeping a happy customer to losing someone over an overdraft fee. This is especially true if you have a long history with the bank, something you should mention when you speak to them.

Lawmakers Urge Banks to Stop Overdraft Fees During Pandemic

At the beginning of the coronavirus pandemic, lawmakers reportedly said the South State Bank overdraft fee practice, along with others, should be put on hold as economic shutdowns rocked American workers. In April, CNBC Make It reported that two U.S. legislators sent letters to major banks asking them to take a break from assessing overdraft and other fees on Americans struggling to make ends meet.

The letter reportedly pointed out that with more Americans out of work, many households are trying to pay the bills, but coming up short. In addition, according to Poynter.org, banks with pending overdraft fees can take these funds from consumers’ stimulus checks, along with debt collectors.

As the coronavirus pandemic continues into the winter months with cases surging, experts are urging consumers to try and avoid these costly fees.

The South Florida Reporter recommends Americans consider what would happen if they lost their job due to COVID-19 restrictions. The Reporter points out that, under the CARES Act, those that hold federally backed mortgages are entitled to a 360-day break on their payments. Delay in these payments may be able to help consumers avoid a costly overdraft fee.

In addition, experts reportedly urge consumers to consider asking their bank to help them out with monthly service fees and overdraft fees. They recommend calling the bank in the event of an overdraft fee to ask for a refund.

Filing an Overdraft Fee Lawsuit

A growing number of banks and credit unions are being hit with litigation by consumers alleging that an institution’s overdraft fee practices are unfair, predatory, and deceptive. For instance, some banks rearrange the order of transactions, processing them from highest to lowest, rather than chronologically, in order to incur as many overdraft fees as possible. Of course, excessive overdraft fees disproportionately hurt lower-income Americans.

If you are a customer at South State Bank or another bank or credit union that may have charged predatory overdraft fees or unfair NSF fees, you may be able to file a lawsuit and pursue compensation. Filing a lawsuit can help provide compensation for any monetary losses that may have been incurred by these unfair practices, as well as hold financial institutions accountable for their overdraft fee policies.

Filing a lawsuit can be a daunting prospect, so Top Class Actions has laid the groundwork 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.

The Improper Fee Class Action Lawsuit is Case No. 2:20-cv-01959-BHH, filed in the United States District Court for the District of South Carolina Charleston Division.

Join a Free Bank Overdraft Fee Class Action Lawsuit Investigation

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.