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MB Financial Facing Lawsuit re $6,000 in Overdraft Fees

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Rhonda Boone seeks class action status in lawsuit against MB Financial for excessive overdraft fees.

Chicago, ILMB Financial dinged Rhonda Boone for a truly jaw-dropping $6,000 in bank overdraft fees between 2015 and 2017. That was 18 percent of her total income for those years. On March 12, 2018 she filed a lawsuit in the Northern District of Illinois seeking class action status on behalf of herself and other similarly situated checking and money market account customers. The fact that these are state law claims suggests that the future direction of consumer financial protection lies in the class action lawsuits to enforce state, rather than federal, law.

Bad bank behavior on steroids

MB Financial charges overdraft fees when a customer has insufficient funds to cover a debit transaction. Like many banks, it determines the sufficiency of funds at the time the merchant settles the transaction, which can be several days after the bank authorizes the transaction. Authorization occurs when the customer swipes the card.

The delay does two things: it can make it harder for the customer to track the account balance. It also allows banks to reorder transactions in a way to maximize the number of overdraft fees they collect. That practice has already come under intense Consumer Financial Protection Board scrutiny. In 2009, banks reportedly collected $37 billion in overdraft fees. During the years in question, MB Financial charged $37 per overdraft, which was among the highest in the country.

In addition, however, MB Financial charged a “continuous overdraft fee” for any overdraft that remained uncorrected for more than one day. It charged that fee every day that the account had a negative balance for up to 16 days.

In 2015, MB Financial charged Ms. Boone a total of $2.121.50; in 2016, it charged her $2,154; n 2017, the total was $1,806. This was at a time when her average income was approximately $1,100 per month. This is a classic example of the kind of predatory lending practice that targets the financially vulnerable.

Bank overdraft fees a widespread problem

Bank overdraft fees are estimated to cost consumers over $15 billion each year. The practice affects more Americans than the payday loan industry, which, until recently seemed on the verge of federal regulation.

Nearly 18 percent of checking account customers pay three or more overdraft fees a year. Half of those pay 10 or more. Perhaps more significantly, bank overdraft fees disproportionately burden low-income customers. Anecdotal evidence suggests that this is one of the reasons why people decide to live without a bank account, which in turn makes it difficult to establish credit and climb the economic ladder. The poor get poorer.

The banks, however, are doing just fine. In 2016, for example, America's three biggest banks, JPMorgan Chase, Bank of America and Wells Fargo, earned more than $6.4 billion from ATM and overdraft fees.

State law claims against MB Financial

Boone’s complaint alleges that MB Financials practice violates the law in three basic ways. First, she claims that the bank breached the terms of her checking account agreement by assessing overdraft fees when the debit transaction was settled, rather than when it was authorized. This is the original maneuver that sets the whole overdraft fee machinery in motion. Although her checking account agreement allowed the bank to charge continuing overdraft fees when a negative balance persisted for two days, she alleges that those fees were assessed before the full 48-hour period of time had elapsed.

Her second claim, that the bank violated a duty implied under Illinois law to act in good faith and fair dealing, goes beyond the letter of the contract to get to the spirit of honest commerce. Specifically, she claims that MB Financial abused its contractual discretion to approve or decline overdraft transactions by programming its “matrix” to maximize overdraft fee revenue at all costs, and to repeatedly authorize transactions that resulted in thousands of dollars of overdraft fees each year.

Finally, she cites the bank for violating the Illinois Consumer Fraud and Deceptive Business Practices Act by engaging in fraud, unfair methods of competition and unfair or deceptive acts or practices in the conduct of trade or commerce. The bank, she alleges, violated Illinois statutory law by intentionally employing a deceptive practice of charging overdraft fees on transactions that were authorized at a time when a sufficient balance existed in an account.

She also seeks class action status with respect to various subsets of MB Financial checking and money market account holders.

Class action lawsuits are the remedy for excessive bank overdraft fees

For all the ballyhoo surrounding the initial creation of the CFPB, neither it nor federal legislation has turned out to be much of a factor in protecting bank customers from excessive bank overdraft fees. Class action lawsuits seem to be the available recourse. They have their limits too, of course. Although they may bring relief to specified classes of plaintiffs, they are necessarily piecemeal, limited by bank, and, in some cases the constraints of state law. Nonetheless, this is the remedy at hand for those who have been the victims of this abusive bank practice.


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Posted by

Td bank keeps hitting me with over draft fees when I already transfered the funds to the account to pay a bill. I do not understand how they keep doing this and get away with it. Im tired of them doing this over and over and its making me go broke by the time I get paid and have to pay them back. How can I take this to a further level. ???

Posted by

Citizens bank is known for this practice. We were charged 300 to 500 dollars daily for an account that was not with insuffiecint funds because of us. They would hold checks then deduct the checks highest first, not by date of check/transaction. We closed the account after a few months because of their banking practice.

Posted by

In 18 months, I paid about $10,000 in overdraft fees at FNB Bank, Inc. Each day they would reorder and manipulate transactions to benefit themselves. I finally had enough and switched to a Credit Union. It’s SO much better now that I have more control over the account. Before I decided to close the constant overdraft account, I complained to the bank, FDIC, CFPB and Ky AG and nothing was done to help the situation. I hope someday FNB Bank will pay for what they’ve done.

Posted by

I was victim from MBank

Posted by

In 2005, Bank of America took my social security check and my paycheck which added up to$600 in one month and Bank overdraft fees. Then they close the bank that was inside of Schnucks in Belleville Illinos.


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