Bank of America settles for USD 75 mln over excessive fees

Monday 17 May 2021 13:34 CET | News

Bank of America has agreed to pay USD 75 million to settle a lawsuit accusing the bank of extracting overdraft fees it didn't earn from customers with savings and checking accounts, Reuters says.

A preliminary settlement of the proposed class action was filed with the federal court in Charlotte, North Carolina, where the bank is based, and requires a judge's approval. Customers said Bank of America often charged multiple USD 35 fees for insufficient funds or overdrafts on a single transaction, sometimes reflecting the bank's repeated attempts to process it at a merchant's request.

One woman said the bank charged her USD 105 after rejecting her USD 20 credit card payment and then attempting without her knowledge to ‘retry’ processing the same payment five and nine days after the initial rejection, resulting in three USD 35 fees. The plaintiffs' lawyers said that as part of the settlement, Bank of America will stop imposing multiple fees on ‘retry’ payments for at least five years, saving customers an estimated USD 5.3 million a month and USD 318 million overall. Bank of America denied wrongdoing in agreeing to settle. A spokesman declined to comment. The plaintiffs' lawyers intend to seek up to USD 25 million from the settlement fund in attorney's fees. Repeated overdrafts can result in account closures and leave some lower-income customers without access to banking services.

Banks have faced many lawsuits over the years claiming they sought to illegally maximize overdraft fees. US-based banks took in USD 11.68 billion of overdraft fees in 2019, according to the Center for Responsible Lending, even before the COVID-19 pandemic left millions in financial distress. Just 9% of account holders paid 84% of the fees, the nonprofit said.

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Keywords: Bank of America, settlement, bank account
Categories: Banking & Fintech
Countries: United States
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