Many people around the country struggle with keeping on top of their finances. It’s really difficult when you’re trying to stay afloat and you keep falling behind. It makes it even more difficult when your bank charges you unnecessarily for these hiccups we all have experienced one way or another.
For those of you who have been charged overdraft fees for debit card purchases, withdrawals from ATMs, or other transactions– you may be in luck. Deceptive overdraft and insufficient funds charges by major banking institutions have been challenged in a recent overdraft fee lawsuit, filed by the lawyers at Johnson // Becker.
What is an overdraft fee, anyway?
An overdraft fee happens to an account holder when more money is drawn out of their account than they actually have in the bank (usually this occurs in a checking account). Banks will oftentimes cover the amount but it is contingent only on charging a fee for such service.
The bank sets its own fee, but the cost is usually around the $35 ballpark. This means that even a small overdraft of a couple dollars could end up costing you three times as much money in the end. To make matters worse, some banks even charge an additional fee per day the account is not brought back to a $0+ balance.
Bank account holders must opt-in to the overdraft protection before a bank can perform this action, as required by federal law. Yet in 2016, Americans shelled out a stunning $15 billion in overdraft fees.
Overdraft fee practices occur with financial institutions in a variety of ways, as outlined below.
In one lawsuit against Bank of America, the bank has been accused of authorizing overdraft fees on non-recurring debit card transactions. Meaning those transactions were labeled as recurring, thus charging overdraft fees on each one.
Early Fee Extraction or Authorization Holds
Some banks have been accused of wrongfully imposing overdraft fees when they should have authorized transactions at the register. By settling transactions, this puts the account holder at risk of assessing overdraft fees unnecessarily.
Extended Overdraft Fees
It is perfectly lawful for a bank to charge interest, but some banks have extended overdraft fees some 7 to 10 days after an account has been overdrawn. Some lawsuits accuse the banks of interest charges that exceed those limits.
Unauthorized Overdraft Protection
This can happen when a person claims they never opted into overdraft protection in the first place. Most people would assume their card would not even process the transaction if the money wasn’t available. Instead, they’d be hit with an overdraft fee for overdrawing their account.
In this instance, the bank prioritizes the largest amount purchased rather in chronological order. This means during any fluctuation of funds, if the purchase price was higher than the amount in the account deposited, a person would be charged with an overdraft fee.
Covered under federal law, a bank is supposed to make deposited funds available to an account holder within a certain amount of day. Some banks have been accused of depositing the money only after an account has gone over withdrawal limit.
Overdraft Fee Class Action Lawsuit
Many different banks from around the country have been involved in overdraft fee lawsuits.
Our consumer fraud attorneys recently filed an overdraft fee lawsuit against Bremer Bank over fees that were deceptively charged to Kristine Crosby. In her lawsuit, Crosby was charged multiple overdraft fees for one single transaction. She is seeking both actual and compensatory damages for the deceptive trade practice. Anyone with a similar issue may join the suit, or file a similar suit with our overdraft fee lawyers.
Other examples include one from 2016, where Wells Fargo was found to have manipulated debit card purchases in order to maximize overdraft fees on unsuspecting and vulnerable customers.
The bank was found to have prioritized the largest withdrawal first, which automatically drew down available balances. After some kickback in the court system, the judgment ended up costing the company a whopping $203 million after all was said and done.
In 2019, TD Bank agreed to pay $70 million to settle lawsuits that it charged customers excessive overdraft fees. Several lawsuits had been consolidated in federal court in South Carolina. The Cherry Hill, New Jersey headquartered bank was required to pay $43 million to customers and cancel roughly $27 million in overdraft fees to account holders.
Do you have an overdraft fee lawsuit?
If any of the above content sounds familiar, you should speak to the lawyers at Johnson // Becker. Filing an overdraft fee lawsuit means getting your money back where it belongs– in your bank account. You may receive financial compensation for costs incurred, refund of the overdraft services, damages related to consumer protection act violations, as well as attorney fees. Contact us today, we offer a Free Case Evaluation and would be honored to speak to you.