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Overdraft Fee Lawsuit

An overdraft fee lawsuit may be an option for individuals who were charged overdraft fees for debit card purchases, ATM withdrawals or other bank transactions.

Overdraft Fees

An overdraft occurs when an account holder draws more money than they have in the bank. Checking accounts are typically the most common accounts that experience overdrafts, and banks will often cover the overdrawn amount for the customer. In many cases, the bank, credit union or financial institution will charge an “overdraft fee” when the account is overdrawn. Each institution sets its own fee, and in most cases, fees average around $35. Some banking institutions also charge an additional amount per day for every day an account is overdrawn.

Federal law states that bank account holders must “opt-in” and agree to overdraft protection before a bank or credit union can charge an overdraft fee. According to the Consumer Financial Protection Bureau (CFPB), overdraft and bounced check fees “constitute the biggest single cost for consumers of owning a checking account.” The CFPB, a government agency responsible for consumer protection in the financial sector, estimates that Americans paid roughly $15 billion in overdraft fees in 2016.

Improper Overdraft Fee Practices

Several banking institutions have allegedly engaged in improper overdraft fee practices, including:

How an Overdraft Fee Class Action Lawsuit Can Help

When a bank, credit union, or other financial institution engages wrongful conduct by violating the terms of its customer agreements or otherwise engages in fraudulent or deceptive trade practices, they could be held liable for any damage that may result.

The actions of the defendants could constitute violations of federal and state law including fraud and misrepresentation, breach of contract, and violations of various state consumer protection laws.

Compensation may be sought for:

Refund(s) for the amount of fees or charges incurred;
Damages related to ancillary harm including damaged credit;
Damages related to violations of consumer protection acts inclusive of treble damages where applicable;
Punitive damages where applicable; and
Attorneys’ fees

Account holders at various banking institutions and credit unions may be eligible to pursue damages through an overdraft fee lawsuit and are encouraged to seek the advice of an experienced consumer fraud attorney to learn more about their rights and remedies.

Overdraft fees can pile up, often Overdraft fees can pile up, often without the bank and credit union account holders realizing it. Account holders who have been wrongfully charged an overdraft fee may be able to file a claim and pursue compensation after a bank or credit union has improperly charged them for overdrawing their account.

Non-Recurring Transactions – According to a class action lawsuit filed in November 2016, Bank of America “has systematically authorized overdrafts on everyday non-recurring debit card transactions” by misclassifying those transactions as “recurring” in order to maximize its overdraft fee revenue.

Early Fee Extraction or Authorization Holds – In some cases, banks have been accused of wrongfully imposing overdraft fees when they settled transactions instead of when they authorized transactions at the cash register. This type of conduct, according to a report by Reuters, was addressed in a class action lawsuit in December 2017.

Extended Overdraft Fees – Banks and credit unions are allowed only to charge so much in interest; however, some of these institutions have reportedly issued an “extended” overdraft fee between 7 and 10 days after a customer’s account has been overdrawn. Lawsuits have alleged that these fees are interest charges that exceed those limits.

Notice: We are no longer accepting cases from individuals affected by the following institutions:

Bank of America
Citigroup Inc.
JP Morgan Chase Bank
PNC Bank

US Bank
Wells Fargo & Company
Woodforest Bank

Unauthorized Overdraft Protection – Some bank and credit union account holders say they never opted-in or requested overdraft protection from their banking institution or credit union. In these instances, the account holder reportedly assumed their purchase would be declined if they tried to make a purchase that would cause them to overdraw their account.
Reordering Transactions – Some banks and credit unions have allegedly reordered an account holder’s transactions so that the largest amounts are processed first rather than chronologically. Reordering transactions in this way can potentially lead to excess overdraft fees.
Irregular Deposits – When a customer makes a deposit, banks are required by federal law to make part or all of those funds available within a certain number of days. The institution can choose to make funds available sooner if they wish, and some bank account holders have reportedly claimed that some deposits aren’t being made until after they have gone into overdraft.

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