Bank Overdraft Fees Lawsuit | 2025 Latest Updates

Bank Overdraft Fees Lawsuit Overview

Our lawyers are reviewing potential lawsuits for people who were billed excessive overdraft fees by banks and credit unions.

Many of these institutions, Wells Fargo, Bank of America, TD Bank, and others, have been ordered to pay hundreds of millions in settlements to resolve allegations of unreasonably high overdraft fees.

These lawsuits aim to protect consumers and potentially reshape the banking industry’s approach to fee policies.

Latest Bank Overdraft Fees Lawsuit Updates

• December 14, 2024: The Biden administration and CFPB pushed for stronger regulations on bank overdraft fees, adding pressure to ongoing litigation against unfair bank practices [1].
• December 12, 2024: The American Bankers Association and other groups filed a lawsuit against the CFPB, challenging the new overdraft fee cap rule aimed at protecting consumers [2].
• August 2, 2024: A $1.5 million settlement was reached in a major bank overdraft fee lawsuit, providing relief for affected consumers [3].
• April 5, 2024: A judge ruled that Bank of America must face a lawsuit over denying overdraft fee refunds, adding to the growing number of overdraft-related cases [4].

Related Article: Credit Union Overdraft Fees Lawsuit

FDA Reports and Statistics

The U.S. Food and Drug Administration (FDA) does not oversee banking practices or financial regulations, so it does not publish reports or statistics related to bank overdraft fees or associated lawsuits.

However, the Consumer Financial Protection Bureau (CFPB) is the primary federal agency responsible for monitoring and regulating such financial practices.

The following are key insights from CFPB on overdraft fees:

• $5.83 billion in overdraft and NSF fee revenue reported by banks in 2023, down 51% from $11.96 billion in 2019.
• $6.1 billion saved annually by consumers compared to pre-pandemic levels.
• $185 average yearly savings for households that regularly incurred overdraft fees.
• $240 million refunded to consumers since 2022, including $177 million for unfair overdraft fees and $64 million for repeated NSF fees.
• 81% of frequent overdraft fee payers reported difficulty paying bills, versus 25% of those who didn’t incur fees.
• $5 overdraft fee cap proposed in 2024 for large banks, expected to save consumers up to $5 billion annually.

Bank Overdraft Fees Injuries & Side Effects

Bank overdraft lawsuits allege several problematic practices that lead to excessive fees and financial hardship:

• Excessive Fee Amounts: Banks charging $35 fees for overdrafts as small as $4.
• Transaction Reordering: Processing the largest transactions first to maximize the number of overdraft fees.
• Authorization Holds: Holding pending transaction amounts that reduce available balance without actually withdrawing the funds.
• Misleading Balance Information: Failing to clearly disclose actual available account balances.
• Opt-In Requirement Violations: Automatically enrolling customers in overdraft protection without proper consent.

Do You Qualify for a Bank Overdraft Fees Lawsuit?

You may qualify for a bank overdraft fees lawsuit if:

• You were charged multiple overdraft fees for transactions processed on the same day.
• Your bank reordered transactions from highest to lowest amount to maximize fees.
• You were charged overdraft fees despite having sufficient funds at the time of purchase.
• You were automatically enrolled in overdraft protection without your explicit consent.
• You were charged overdraft fees for transactions that were pending but hadn’t actually posted yet.

Evidence Required for a Bank Overdraft Fees Lawsuit

To strengthen your case, you should gather:

• Bank statements showing overdraft fees.
• Account agreements and disclosures from your bank.
• Records of communications with the bank regarding the fees.
• Documentation of any attempts to opt out of overdraft protection.

Damages You Can Recover

If successful, you may be entitled to recover:

• Costs incurred from overdraft fees
• Refund of overdraft protection services
• Damages related to Consumer Protection Act violations
• Attorney fees
• Additional compensation for financial hardship caused by excessive fees

Largest Settlements to Date:

• Wells Fargo: $3.7 billion (2022, includes $2 billion consumer redress for overdraft and other abuses).
• TD Bank: $122 million (recent CFPB penalty for overdraft practices).
• Bank of America: $100 million (2023, for double-dipping NSF fees).

Bank Overdraft Fees Regulations

U.S. federal law specifies that a bank cannot charge extended overdraft fees on debit purchases or ATM withdrawals unless the consumer agrees.

A law that took effect in 2010 forbids banks and credit unions from charging unfair overdraft fees on transactions unless the bank customer agrees to “opt-in” to overdraft protection.

However, charges may apply when checks or automatic bill payments overdraw an account, even when the customer declines overdraft protection.

There are still no laws regarding how much money banks charge for multiple overdraft fees, meaning customers who opt into the program can still pay unreasonable fees for overdraft transactions.

Statute of Limitations for Bank Overdraft Fees Lawsuits

The time limit to file a bank overdraft fees lawsuit varies depending on the legal basis for your claim:

• Consumer Protection Laws: Typically 2-6 years, depending on your state
• Breach of Contract: Usually 3-6 years from the date of the violation
• Unfair Business Practices: Generally 2-4 years, varying by state

It’s crucial to consult an attorney as soon as possible to ensure you file within the applicable statute of limitations for your specific situation.

FAQs

1. What are the common allegations in overdraft fee lawsuits?

Common allegations include deceptive practices, misrepresenting account balances, reordering transactions to maximize fees, and failing to provide clear disclosures about overdraft policies.

2. What have been the outcomes of these lawsuits?

Many banks and credit unions have been ordered to pay hundreds of millions of dollars in settlements to resolve allegations of excessive overdraft fees.

3. What compensation can I seek in an overdraft fee lawsuit?

Compensation can include reimbursement of overdraft fees, damages for financial harm, and possibly punitive damages if the bank’s conduct was particularly egregious.

4. How do I file a lawsuit for excessive overdraft fees?

Contact a lawyer specializing in consumer protection or financial litigation to discuss your case, gather evidence, and file a lawsuit on your behalf.

5. Are class action lawsuits more effective than individual claims?

While Schmidt & Clark, LLP is a nationally recognized class action firm, we have decided against class action lawsuits when it comes to bank overdraft fee cases. Our lawyers feel that individual suits will be the best way to get maximum payouts to our clients.

6. How can I avoid overdraft fees in the future?

You can avoid most overdraft fees by setting up direct deposit, tracking your balances regularly, maintaining a cushion in your checking account, linking accounts for protection, opting out of overdraft protection, using a small line of credit, setting up automatic notifications, and changing banks if necessary.

7. What banks have faced overdraft fee lawsuits?

Major banks that have faced lawsuits include Wells Fargo, Bank of America, TD Bank, M&T Bank, HSBC, UMB Bank, Wachovia, and many others.

8. Have banks changed their overdraft policies due to lawsuits?

Yes, many banks have modified their overdraft policies, reduced fee amounts, or eliminated certain types of overdraft fees in response to lawsuits and regulatory pressure.

9. How long does it take to resolve an overdraft fee lawsuit?

Individual claims typically take six months to over a year, especially if the case proceeds to trial, while class actions can take several months to years depending on the complexity.

Get a Free Bank Overdraft Fees Lawsuit Evaluation From Our Lawyers

Time is limited to pursue legal action for excessive bank overdraft fees. Most states have statutes of limitations that may affect your ability to seek justice and compensation.

The Finance and Insurance Litigation Group at Schmidt & Clark, LLP is an experienced team of trial lawyers who focus on the representation of plaintiffs in bank overdraft fees lawsuits.

We are handling individual litigation nationwide and currently accepting new cases in all 50 states.

Our services include:

• Free, confidential consultations
• No upfront costs or fees
• Payment only if we win your case

References: 

1. https://apnews.com/article/overdraft-fee-biden-cfpb-trump-bank-a629a448d209fcc41fd30bbae61d6763
2. https://www.aba.com/about-us/press-room/press-releases/lawsuit-against-cfpb-overdraft-final-rule
3. https://infobytes.orrick.com/2024-08-02/bank-agrees-overdraft-fee-settlement-15m/
4. https://www.aba.com/about-us/press-room/press-releases/lawsuit-against-cfpb-overdraft-final-rule