First Interstate Bank Agrees To Pay $2.3M Settlement In Fee Class Action

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First Interstate Bank Penalty Fees Class Action Settlement Overview: 

• Who: First Interstate Bank agreed to a $2.3 million settlement with a class of its customers. 
• Why: Customers claimed First Interstate breached its contract with them by charging them illegal penalty fees.
• Where: The class action lawsuit was filed in Montana federal court.

First Interstate Bank has agreed to pay $2.3 million to resolve a class action lawsuit alleging it charged customers illegal penalty fees. 

The settlement class includes any First Interstate customer who was dealt an overdraft or returned item fee from between Dec. 30, 2011, and Apr. 7, 2021, the Billings Gazette reports. The bank will also forgive uncollected fees from during that time. 

Separate from the settlement, First Interstate also announced recently that, starting Apr. 1, it will no longer be charging for non-sufficient funds (NSF) and will be reducing its overdraft fee charges. 

Customers claimed First Interstate was guilty of unjust enrichment and breach of contract, among other things, by charging what they argued were illegal penalty fees, the Billings Gazette reports.  

First Interstate Admits No Fault as Part of Settlement Agreement

First Interstate is not acknowledging, admitting to or conceding to any of the allegations against it as part of the settlement agreement. 

The settlement still must achieve final approval with a date set for June 27, the Billings Gazette reports. 

The Consumer Financial Protection Bureau (CFPB) released a report in December in which it argued banks heavily rely on penalty fees, including overdraft fees, to accumulate revenue. 

According to the report, banks earned an estimated $15.47 billion in revenue from overdraft fees in 2019 with Wells Fargo, JP Morgan Chase and Bank America accounting for a third of it. 

The CFPB subsequently vowed to crack down on banks which have a common practice of charging their customers fees, specifically those which rely on them the heaviest. 

Later that same month, NBT Bank agreed to a $5.7 million settlement to resolve claims it charged its customers unjust overdraft fees. 

NBT agreed to forgive $1.5 million in unpaid overdraft charges as part of the agreement, which included all of its bank customers from Dec. 4, 2013, to Nov. 30, 2021. 

The class action lawsuit was originally filed in 2019 by an NBT Bank customer who argued the financial institution would repeatedly charge a penalty fee on an item that had already been rejected. 

Has your bank charged you an overdraft fee? You may be eligible to join a free bank overdraft fee class action lawsuit investigation!

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