A judge's recent decision in a lawsuit involving overdraft fees appears to have bolstered the case against banks, but it remains to be seen whether that decision will have a significant impact on pending lawsuits. The judge ruled that the banks cannot force customers into arbitration to settle a dispute, opening the door for customers to file lawsuits in cases where they are charged excessive fees. That decision can be appealed, however, so until a final decision is reached, it is not certain that the determination in this case will have an effect on upcoming lawsuits.
If an appeals court affirms this decision, it could have a substantial impact on lawsuits alleging excessive bank overdraft fees.
What is important for customers to know is that many banks have reportedly used transaction reordering to push customer accounts into overdraft more quickly than they should have been, providing banks the opportunity to profit off fees collected from overdraft transactions. And those fees reportedly added up to the tune of more than $30 billion last year.
Some banks have announced they are doing away with reordering transactions—a practice in which debits from an account are processed from highest amount to lowest, which can push an account into overdraft far more quickly than the customer realizes.
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Some banks have already settled their lawsuits. Bank of Hawaii reportedly settled claims for $9 million, while National City agreed to pay $12 million in a settlement. Customers who were charged more than one overdraft transaction fee in a day may have been victims of transaction reordering. They may be able to file a lawsuit—or join a lawsuit—against their bank for charging excessive overdraft fees.