What is an Overdraft Fee?
Fees are charged by banks and credit unions to move money to a bank account balance when a bank customer is overdrawn. This money may come from a linked checking account or loan provided by the financial institution. Overdraft fees are also known as a non-sufficient funds (NSF) fee or courtesy pay fees.
What is the Overdraft Protection Law?
Rules regarding overdrafts changed in 2010. Before the Overdraft Protection Law passed, most financial institutions automatically enrolled customers' bank accounts in overdraft coverage. Then in July 2010, the Federal Reserve enacted the Overdraft Protection Law, which prohibited banks and credit unions automatically enrolling customers and instead requiring banks to inform customers they have to opt in or opt out at any time for overdraft services.
This law only applies to a debit card transaction that is not pre-authorized, such as ATM withdrawals and transactions. Pre-authorized withdrawals, such as automatic bill payment and checks, do not fall under the umbrella of the law and still can still lead to a single transaction overdraft fee.
What is a Credit Union?
Credit unions are member-owned non-profit organizations that function much like a bank. These businesses accept deposits, make loans, and provide other financial services. Profits are returned to members in the form of reduced fees, higher savings, and lower loan rates.
Does My Checking Account Automatically Have Overdraft Protection?
No. Banks are prohibited from charging overdraft fees unless the customer has "opted-in" to the overdraft program.
Can I File a Class Action Over Debit Card Transactions?
Our class action attorneys have decided against this type of litigation when it comes to fees claims. Our lawyers feel that if there is a successful resolution to these cases, individual suits, not class actions will be the best way to get maximum payouts to our clients.
If you’ve had overdraft fees charged, we know you’ve suffered emotionally and economically, and want to work with you personally to obtain the maximum compensation for your damages. Contact us today to learn more about your legal rights.
Have There Been Any Settlements Over Charged Overdraft Fees?
Several class action lawsuits have recently been filed against banks for deceptive overdraft practices, some of which resulted in a class action settlement. Suits have been filed against:
- Wells Fargo
- Bank of America
- M&T Bank
- Midflorida Credit Union
- UMB Bank
- TD Bank
- And more
Some prominent overdraft lawsuits include:
- In 2014, a federal judge ordered Wells Fargo to pay $203 million to settle class action allegations against the bank for wrongfully processing transactions in order to charge excessive fees. This practice was found to be in violation of California state law.
- In 2017, Bank of America agreed to pay $66.6 million to compensate nearly 6 million Bank of America customers who were forced to pay extended fees on their bank statements. This came in the form of unlawful interest rates charged to a customer's account that were left overdrawn for several days.
- In 2012, J.P. Morgan Chase agreed to pay $110 million to settle a lawsuit regarding excessive fees. According to the lawsuit, JPMorgan engaged in an “unfair, deceptive, and unconscionable” collection of extended overdraft fees from checking accounts.
Related Article: Bank Overdraft Fees Lawsuit
Holding Banks Accountable for Improper Fees
The lawyers at Schmidt & Clark, LLP, have been busy responding to consumer complaints about improperly charged multiple overdraft fees. After a thorough investigation, our attorneys found that many of these banks did illegally charge fees to checking account customers and brought suit against these financial institutions to return monies back to these consumers.
Our investigations uncovered that banks and credit unions repeatedly charged consumers overdraft or insufficient funds fees for transactions even though funds were available. Our team is proud to have litigated claims across the U.S., and has returned millions of dollars in improper bank fees to thousands of bank consumers. We have brought suit against financial institutions in the states listed below. If you have been charged an overdraft of insufficient funds fees that you believe are improper, contact us. Our attorneys can review your information and advise you of your legal rights.
- Banks charged excessive fees to their customers;
- Fees were processed out of order so that customers were charged the highest possible fees;
- Failure to disclose fee structures;
- Mismanagement of funds;
- Banks have continuously allowed their customers to overcharge their accounts, regardless of sufficient funds, causing additional fees;
- Other improper financial practices.
Check out our website to find out which finance and insurance lawsuits our lawyers are currently accepting
Get an Overdraft Fees Lawsuit Evaluation With Our Lawyers
The Finance and Insurance Litigation Group at our law firm is an experienced team of trial lawyers that focus on the representation of plaintiffs in overdraft fee lawsuits. We are handling individual litigation nationwide and currently accepting new cases in all 50 states.
If you or a loved one was charged multiple fees for insufficient funds by banks or credit unions, you should contact our law firm immediately. You may be entitled to compensation by filing a suit and our lawyers can help.