Make us your home page
Instagram

Judge: Bank of America owes customers $410 million for excessive overdraft fees

MIAMI — A federal judge on Monday gave final approval to a $410 million settlement in a class-action lawsuit affecting more than 13 million Bank of America customers who had debit card overdrafts during the past decade.

Senior U.S. District Judge James Lawrence King said the agreement was fair and reasonable, even though it drew criticism from some customers because they would receive only a fraction of what they paid in overdraft fees. The fees were usually $35 per occurrence.

"It's really undisputed that this is one of the largest settlements ever in a consumer case," said Aaron Podhurst, a lead attorney for the customer class.

The lawsuit claimed that Bank of America processed its debit card transactions in the order of highest to lowest dollar amount so it could maximize the overdraft fees customers paid. An overdraft occurs when the account doesn't have enough money in it to cover a debit card transaction. Similar lawsuits have been filed against more than 30 other banks.

The settlement became final a week after Bank of America of Charlotte, N.C., backed off a plan to charge a $5 monthly fee for debit card purchases. The outcry prompted other major banks, including JPMorgan Chase and Wells Fargo, to cancel trial tests of their own debit card fees.

Bank attorney Laurence Hutt said 13.2 million Bank of America customers who had debit cards between January 2001 and May 2011 would get some payment. Those who still have accounts would get an automatic credit, and the others would get a check mailed to them. No one would have to take any action or fill out any paperwork.

Barry Himmelstein, an attorney for customers who objected to the deal, said he calculated that the bank actually raked in $4.5 billion through the overdraft fees and was repaying less than 10 percent. He said the average customer in the case had $300 in overdraft fees, making them eligible for a $27 award — less than one overdraft charge — from the lawsuit.

"It's $4.5 billion that's gone missing from people's accounts," Himmelstein said.

Hutt said only 46 customers filed formal objections to the settlement and 350 decided to opt out, meaning they could take separate legal action on their own.

Customers will receive a minimum of 9 percent of the fees they paid through the settlement, Hutt added. The bank already has paid the money into an escrow account.

Despite the settlement, Bank of America insists there was nothing improper about the processing sequence. New regulations enacted following the recent financial crisis prohibit banks from charging overdraft fees on debit cards without first getting customer permission.

Judge: Bank of America owes customers $410 million for excessive overdraft fees 11/07/11 [Last modified: Monday, November 7, 2011 10:38pm]
Photo reprints | Article reprints

Copyright: For copyright information, please check with the distributor of this item, Associated Press.
    

Join the discussion: Click to view comments, add yours

Loading...
  1. Did Hurricane Irma speed the end of Florida orange juice?

    Agriculture

    Hurricane Irma plundered Florida's orange belt, leaving a trail of uprooted trees, downed fruit and flooded groves worse than anything growers say they have seen in more than 20 years.

    A large number of oranges lie on the ground at the Story Grove orange grove in the wake of Hurricane Irma on Sept. 13, 2017, in Lake Wales. [Photo by Brian Blanco | Getty Images]
  2. St. Petersburg's newest hotel opens with craft beers, cocktails and Cozy Corners

    Real Estate

    ST. PETERSBURG — Last spring, Ryan Tarrant applied for a job with the new Hyatt Place nearing completion in downtown St. Petersburg. Among the questions an interviewer asked:

    What does this hotel need to succeed?

    Hybar, a bar area with outdoor seating  that will feature craft drinks and Sunday brunch starting Oct. 1, is ready to open at the new Hyatt Place hotel at  25 2nd St. N in downtown St. Petersburg. [SCOTT KEELER   |   Times]
  3. Culver's crosses into Brandon near Selmon Expressway

    Business

    BRANDON — Like many children, Theresa Hutchins recalls pleading with her parents to take her for ice cream.

    Theresa Hutchins and her fianc? Mike Carelli opened the Tampa Bay area’s newest Culver’s August 28 in Brandon at 2470 S Falkenburg Road.
  4. Back to life: Event helps Riverview revert to peaceful pace after Irma

    Human Interest

    RIVERVIEW — Robin and Ray Castell say establishing residency in the Winthrop Village was one of the best decisions of their lifetime.

    hillsbrandon092217: Meredith Tucker of Riverview, the mother of two children and another one soon on the way, browses the racks of Dot Dot Smile children?€™s clothing as company merchandiser Kelcie Schranck, standing behind her in the black shirt, looks on during the first-of-its-kind Recruiting the Community event on Sept. 17 at the Barn at Winthrop in Riverview. Photo by Joyce McKenzie.
  5. SEC says hackers may have profited from stolen info

    Business

    The Securities and Exchange Commission says its corporate filing system was hacked last year and the intruders may have used the nonpublic information they obtained to profit illegally.

    In this file photo, Securities and Exchange Commission (SEC) Chairman nominee Jay Clayton testifies on Capitol Hill in Washington at his confirmation hearing before the Senate Banking Committee. The SEC says a cyber breach of a filing system it uses may have provided the basis for some illegal trading in 2016. [AP file photo]