Bank of America Gets Court Approval of $410 Million Settlement With Customers Alleging Excessive Overdraft Fees
Charlotte, N.C.-based Bank of America Corporation (BOA), the nation's biggest issuing bank for debit cards, obtained court approval of a $410 million settlement. The settlement occurred between BOA and customers who claimed they were illegally charged unreasonably high overdraft fees on transactions made electronically. The disgruntled BOA customers claim the fees were excessive. The settlement did not require BOA to admit any liability in making the large settlement payment.
Judicial Response to BOA's Settlement With Customers Over Overdraft Fees
U.S. District Court Judge Lawrence King approved the settlement between BOA and 1 million debit card holders. The Miami, Fla.-based jurist consented to the proposed settlement of payments equating to $.45 per dollar for customer claims. Unfortunately, even though claims will be partially paid and the total settlement pool is hefty, the affected debit card holders will only be receiving a portion of the total overdraft fees they previously paid to the mega bank. Notwithstanding the fact that settlement payments are only partial compensation for customer losses, Judge King commented the class action litigants were going to receive a marvelous result from the approved settlement. BOA shared the judge's enthusiasm in characterizing the settlement as a fair resolution of customer claims.
BOA Not the Only Bank in the Hot Seat for Overdraft Fees and Account Processing Procedures
The BOA settlement is a watershed development in several respects. The settlement marks the first that has been made public and gained court approval between banks and customers over processing of account transactions, particularly in the electronic context. Increasingly, bank customers are tiring and growing intolerant of bank procedures that process customer accounts in a way that actually spurs more overdraft charges.
Union Bank NA, which is based on the west coast in San Francisco, has recently agreed to pay $35 million for its similar settlement with disgruntled customers over overdraft fees. JPMorgan Chase & Co. and Wells Fargo & Co. also had policies in place, purportedly, that were engineered to charge bank customers with illegal excessive overdraft fees.
Details of Debit Card Customer Settlements With BOA Over Overdraft Fees
The BOA case drilled down to essentially one issue: the bank's automatic assessment of overdraft fees for debit card electronic transactions to more than 13 million customers. Slowly, but surely, major banks are enacting policy changes to address these customer concerns. The motivation to look away from quickly-mounting profits for these banks came from the Federal Reserve Bank. The Fed Reserve, in 2010, put into place rules and regulations that prohibit banking lenders from automatically charging overdraft fees when a customer has lacking funds for the completion of a particular electronic or debit card transaction.
If you have a claim against BOA or any other bank for overdraft fees or other account transaction processing policies, you may consider consulting a consumer attorney as soon as possible. Such an attorney can address questions and concerns and provide guidance on remedies, rights, and options available. Time may be of the essence.