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Bank of America Settles Bank Overdraft Fees Lawsuit

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Tampa Bay, FLCustomers who are concerned about excessive bank overdraft fees may be happy to hear that some bank overdraft fees lawsuits have been settled, with the defendants paying for their alleged excessive bank fees. Both Bank of America and Wells Fargo have or will pay customers for practices that critics and a judge argue are unethical. Meanwhile, other banks face lawsuits, which allege that they use unfair practices to increase profits while harming consumers.

Bank of America agreed to settle a lawsuit alleging the bank used unethical practices, including "reordering" of transactions to increase profits. Customers who had a Bank of America account with a debit card between January 2001 and May 2011 could be eligible to receive money from the settlement, which will see customers share proceeds from a $410-million fund.

According to The Associated Press (08/06/11), Bank of America was accused of reordering transactions, a practice that involved deducting debits from an account starting with the largest transaction first. That practice put customers at risk of paying more overdraft transaction fees than they should have, if their accounts had been debited in the order the transactions occurred.

Lawsuits against banks that used reordering alleged that the practice was done for the purpose of generating fees. According to some reports, banks averaged $39 billion in overdraft fees a year until the Federal Reserve changed laws overseeing overdraft policies.

The New York Times (05/23/11) reports that there are as many as 30 other banks who have not yet settled similar lawsuits, including Citibank and JPMorgan Chase. The Federal Reserve has also ordered banks to obtain customers' permission before enrolling them in overdraft protection.

In August 2010, Wells Fargo was ordered to pay $203 million to customers, after a judge ruled the bank's practices were unfair and deceptive. In his ruling, the judge ruled that Wells Fargo not only reordered transactions, but also misled customers into thinking purchases would be charged in the order made, rather than being reordered.

Meanwhile, lawsuits are being filed against other banks, alleging they, too, use unfair practices in ordering overdraft transactions. One lawsuit was filed against Union Bank of California, alleging the company charges excessive overdraft fees. According to the lawsuit (as cited by CBS MoneyWatch (08/11/11), Union Bank reportedly holds charges to an account, sometimes for multiple business days, allowing the bank to amass a number of charges on the account. The bank then allegedly posts all the charges on a single date.

"When the group of charges is eventually posted to the customer's account, Union Bank posts them in order of largest to smallest… This delayed posting results in the imposition of multiple overdraft fees that would not otherwise be imposed. The delayed posting also prevents customers from ascertaining accurate balances in their accounts," the lawsuit alleges.

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READER COMMENTS

Posted by

on
i receive a check yesterday for $26.04.from Bank Of America for the settlement .. wtf .. they stole way more than that from me . This is not justice!!!!

Posted by

on
i receive a check yesterday for $26.04.from Bank Of America for the settlement .. wtf .. they stole way more than that from me . This is not justice!!!!

Posted by

on
Here it is july 2012,where is the settlement money?

Posted by

on
I know I'm included in this lawsuit against B of A and yet have not seen a cent from them. Better yet, B of A is still "practicing" reordering of transactions.

Posted by

on
When will we see our money back from the Bank of America overdraft case? This was in November Wtw...

Posted by

on
This is great, the banks steal 40 billion last year from Americans, and they give back 400 million, sounds like a good deal for the banks. Now the congress is talking about bailing them out again, or water down the law suits. Its hard to figure out who is the bigger crooks.

Posted by

on
As notorious as BAnks are,Worse ARE Insurance companies. I was CHEATED out of funds in my attempt to cash in my Term life policy. They actually PAID for its continuance after my expressed wishes to NOT keep my account open AFTER my beneficiary dies,and I had NO other beneficiary. My beneficiary PAID my poliicy via ACH from his bank account,which hey continued to receive AFTER his death. I feel SWINDLED bywell known Insurer.

Posted by

on
I fail to see how Regions Bank is collecting overdraft fees on mistakes in posting debits and credits when they were due, not AFTER they were due!

Posted by

on
You should also go after US BANK. They do the same thing. Debits are held and then they throw in a check from the largest to the lowest. Instead of getting one charge they charge for 3 even though the money was already taken out for the debits.

Posted by

on
There is another need for an additional class action, as, the bank in its rush to rob more money, have closed several[maybe thousands] of accounts in the last month and they charge $40.00 each to do this, BOA closes the accounts based on the amount of non sufficient fund fees, in the past,but they caused these fees to be charged, in the first place, hey lawyer make me the Plaintiff and I will assist with the discovery.

When the bank closes an account the bank would take several days or weeks to refund the money, this client`s money stays on the banks books for all that time and would appear as the banks money and would make the banks balance sheet look better, to help cure the banks losses and assist it to weather its current deficiency.

BOA and all the banksters are making huge profit of ill gotten gains from their clients.

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