Bank of America, the largest U.S. bank by assets, is among more than two dozen U.S., Canadian and European lenders that had been named as defendants in the class-action litigation, which in 2009 consolidated lawsuits filed across the country. The other defendants include such banking giants as JPMorgan Chase, Citigroup and Wells Fargo.
Overdraft fees, which are typically $25 or $35, disproportionately burden customers with lower incomes or low account balances. In their November 2009 complaint, customers accused Bank of America of routinely processing debit transactions from largest to smallest rather than in chronological order. The term for this is “Resequencing” and it can cause the customer's balance to dwindle faster than it might have otherwise. When accounts fall fast, overdraft fees can start to rack up in the hundreds of dollars, even if the account had been overdrawn by just a few dollars.
Bank of America spokeswoman Anne Pace said in an email the Charlotte, North Carolina-based bank has eliminated overdraft fees for debit card transactions and significantly lowered fees for customers who overdraw excessively. Last year, the Federal Reserve prohibited banks from charging overdraft fees on electronic and debit card transactions without advance customer approval. Some banks have been aggressively urging customers to opt-in to overdraft protection but Bank of America no longer covers overdrafts on debit cards-it simply rejects the transaction at the point of purchase.
The case is In re: Checking Account Overdraft Litigation, U.S. District Court, Southern District of Florida, No. 09-md-02036.
Meanwhile, Wells Fargo has appealed an August 2010 court order that it pay $203 million to California customers in an overdraft case.
