Bank Overdraft Fee Class Action Lawsuits
The Gilreath Law Firm has recently filed a putative class action lawsuit in North Carolina against a regional state bank concerning unfair and deceptive overdraft fees. The complaint alleges that the bank has a systematic practice of re-ordering electronic debit transactions from the highest dollar amount to the lowest dollar amount for the purpose of maximizing the overdraft charges the bank assesses its customers. The complaint, among other things, alleges a violation of the North Carolina Unfair and Deceptive Trade Practices Act and seeks treble damages.
Our investigation has revealed that many bank customers are not aware that their bank automatically enrolls their customers in "overdraft protection" which kicks in when the customer spends more than they have in their account. Typically the customer is not notified at the time of purchase that they have overdrawn their account and that an overdraft fee will be assessed. The debit card transaction is not declined by the bank and the bank does not record the debit charges in the order they actually occur. In short, the banks reorder the charges so the largest amounts are paid first which creates an overdraft that would not have occurred. This allows the banks to maximize overdraft fee income. The average overdraft fee usually runs from $30 to $35 per transaction.
Our investigation has revealed that some banks have gone so far as to purchase special software which manipulates the order of the debit transactions so as to maximize the income to the banks. The seller of this software typically receives an incentive commission from the bank for the extra overdraft fees its software creates. We have reviewed internal documents from at least one bank where they have acknowledged that the bank will charge an overdraft fee when the customer still sees a positive ledger balance on their computer/ATM screen when they make an inquiry to review their current balance. In this situation the unsuspecting customer uses his debit card thinking he has a positive balance but the bank has its secret program in place to re-order the transactions to create an overdraft that really didn't exist so it can charge the customer an overdraft fee.
If you think your bank has charged you overdraft fees, particularly multiple overdraft fees over a short period of time, we may be able to help you. Please contact us at your earliest convenience to discuss your rights.