Bank Of America Gives $410 Million Settlement In Overdraft Fee Suit

By Cornelius Nunev


Bank of America recently came to a settlement in an enormous class action suit over overdraft fees.

The settlement will cost B of A $410 million. The case is part of a large number of related suits against tons of differ-ent banks. Don't worry; you will still be able to get your installment loans from these banks.

Charges on accounts lead to law-suits

Overdraft fees and account fees aren't popular among consumers, and anger over charge practices has led to major class action lawsuits against some of the larg-est financial institutions in the United States and Canada. Bank of America has one class action suit with about 1 million individuals in it along with other banks with comparable suits for instance JPMorgan Chase, Citigroup and Wells Fargo, states Bloomberg. Bank of America is able to settle now. A $410 million settlement has already been approved. More than two dozen banks from the U.S. Canada and Europe are being sued for overdraft fees, according to Reuters, and the cases were all consolidated into one massive class ac-tion. The case is titled In Re: Checking Account Overdraft Litigation.

Undue burden placed on vulnerable customers

Bank of America is alleged to have processed transactions from largest to smallest instead of by when the transactions were made, thus making it more probable that accounts would fall into overdraft and the sum recovered by the banks would be greater. Short term credit and overdraft fees are effortlessly compared. The bank will les the trans-action be made as a "loan" to the consumer and then charge a fee for it. Fees vary by institution, though fees between $25 and $35 are common. Some customer supports do not like overdraft fees since they think it is cruel to consumers that cannot afford them. Customers have to choose to be in an overdraft program if they want to be in one since banks cannot do it automatically.

Pilot B of A program

Soon a pilot program at Bank of America will start. The Los Angeles Times reports this will be for mobile banking. The consumer is sent a text message if a transaction is dropped asking if the customer wants to use the bank's overdraft protection on that transaction. The consumer has to deposit the funds then by 8 p.m. that evening to cover the transac-tion. If they do not, then they'll get the $35 fee. This is only allowed with the one transaction. It is very limited. The New York Times reports that when the Consumer Financial Protection Bureau begins operations, overdraft fees will become essential to review. The Consumer Financial Protection Bureau is involved in an ongoing Congressional tug-of-war over the director posi-tion and what powers the bureau should have.




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