Federal Court Rules Consumers' Claims Against Nation's Leading Banks for Excessive Overdraft Fees May Proceed

Judge James Lawrence King of the U.S. District Court has denied motions made by several of the country’s top banks to derail consolidated federal lawsuits in a federal court in Miami. The lawsuits allege that the banks wrongfully collected hundreds of millions of dollars in overdraft fees on consumer debit card purchases through a transaction reorganization scheme.

Judge King wrote in a 50-page opinion that Citibank, U.S. Bank, Bank of America, JPMorgan Chase, Wells Fargo, and Wachovia, among others, were not entitled to a dismissal of complaints. While the banks initially argued that customer should not be able to bring private litigation in order to recover excessive overdraft fees, the judge concluded that the plaintiffs brought forth sufficient evidence to suggest that the banks were acting in bad faith. The lawsuits accuse the banks of manipulating the order of transactions in order to maximize the number of overdraft fees charged to customers.

According to the plaintiffs, the collection of overdraft fees, usually at between $30 and $35 each, impacts millions of Americans annually, often creating a domino effect of even more fees that harms the most vulnerable consumers. Although Bank of America has announced that they will no longer charge overdraft fees on debit transactions, this change is belated.

What is Overdraft Protection?

Today, when customers open checking accounts, they are provided with debit cards. Rather than declining a purchase when the customer’s account contains insufficient funds, the customers are automatically enrolled in “overdraft protection” up to a few hundred dollars. Instead of having a purchase declined, customers who overdraw their accounts are assessed a fee. The problem is that these banks have not been ordering transactions chronologically, but by amount, with the largest transaction listed first. This way, the customer overdraws multiple times for multiple smaller transactions, costing them more in fees.

The complaints were filed in the United States District Court for the Southern District Court of Florida in Miami before Judge King. Plaintiffs' lead counsel Bruce Rogow and Robert C. Gilbert work with a Plaintiffs Executive Committee comprised of the law firms of Golomb Legal, P.C., Baron & Budd, Podhurst Orseck P.A., Lieff Cabraser Heimann & Bernstein, LLP, and Trief & Olk, Webb, Klase & Lemond, LLC.

Bank customers who have been charged multiple overdraft fees who are interested in learning more about this litigation are encouraged to visit www.bank-overdraft.com where they can submit their complaint to plaintiffs' counsel. To speak with an experienced Philadelphia class action lawyer at Golomb Legal, P.C., please call (215) 278-4449. Our firm handles a wide array of complex litigation including class action and multi-plaintiff cases.