Bank of America Overdraft Lawsuit Settled for $410 Million
The Bank of America overdraft lawsuit has been settled. Your account will be debited $410 million, reports The New York Times.
Bank of America announced this week it has obtained a Miami federal court's preliminary approval of a settlement, in which the bank will pay debit card customers and their attorneys a total of $410 million.
The settlement buys Bank of America out of a class action lawsuit, in which about 30 banks face charges of excessive overdraft fees on debit cards, reports the Times.
Banks remaining as defendants in the lawsuit include JP Morgan Chase, Wells Fargo U.S. Bank and Citibank.
The plaintiffs' claims arose from banks' practice of deducting debit charges not chronologically, but in descending order, largest to smallest. Thus, where each NSF item incurs a separate $35 charge, the descending order technique maximized NSF fees charged by the banks, reports the Times.
Bank of America no longer charges overdraft fees for debit purchases--it simply declines the charge item at the point of sale instead, reports the Times.
The Bank of America overdraft lawsuit awaits a court hearing on final approval in November, reports the Boston Globe.
The Federal Reserve announced new rules concerning overdraft protection charges in 2009. The rules went into effect on July 1, 2010. Overdraft fees now require consent from accountholders, and new accounting rules apply to processing order.
In the Bank of America overdraft lawsuit, plaintiff class members will not receive notice of the settlement until after it receives final court approval. Objections could still surface, requiring resolution by the Miami court.
If court-aproved, plaintiffs' attorney fees will run about 30% of the $410 settlement.
The Bank of America overdraft lawsuit settled this week included claims arising from charge processing order. The settlement has no effect on other lawsuits pending against Bank of America in New Jersey, California, Washington and elsewhere around the country, reports the Times.
Related Resources:
- BofA $410 million overdraft settlement wins court OK (Reuters)
- Bank of America $410 Million Overdraft Fee Accord Approved (Bloomberg.com)
- How Keeping Bank Fees Down Can Reduce the Cost of Banking (FindLaw)
- Debit Card Caps Could Mean More Credit Card Debt (FindLaw's Phoenix Bankruptcy Law News)
- Overdraft Fee Bonanza (FindLaw's Common Law)