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Citizens Bank Overdraft Fee Settlement
Citizens Bank Overdraft Fee Settlement
By
Archana Sabesan
on May 23, 2012
For the last decade, individuals have been repeatedly making accusations about excessive bank overdraft fees. If you are like most Americans, you use your debit card for almost everything: from a cup of coffee, to lunch, to even bigger purchases such as TVs and other electronics. Banks are well aware that many people rely on their cards and sometimes may spend more than what they have. And this is where the overdraft fees come in play.
Banks have automatically enrolled their customers in "overdraft protection" without their knowledge. What this does is when the customer spends more money than in their account, the bank charges an overcharge fee (after a certain amount) instead of the debit card being declined because of insufficient funds. However, banks have been using misrepresentations of account balances and reordering credits and debits to push customers into overdraft.
One practice that banks were accused of using was reordering transactions on accounts. No matter what order transactions occurred during that day, some banks would process the largest transactions first. This led to a lot in extra fees for that customer to pay. For example, if you payed $10, $20, $40, and $100 in one day (in that order), with only $140 in your account, it will most likely go into overdraft. However, if the transactions are processed from largest to smallest, it leaves the customer with three times the fee than if the transactions were processed in order.
As of July 2010, banks have started asking if customers would like to have the
overdraft protection
, instead of automatically signing them up for it. This has saved consumers a lot of money, but has also take a lot of revenue away from banks. A few of the banks who had lawsuits filed against them were
Bank of America
, Wells Fargo, Wachovia, and
JPMorgan Chase
. Citizens Bank is the latest bank (and 13th bank) to reach a settlement in overdraft fees. According to different articles, Citizens Bank will pay up to $137.5 million to settle the lawsuit.
The settlement has not been approved yet, and may take a few months before it is. It may take even longer to figure out how much each person will get back. If you are banking with Citizens Bank, the only you can do right now is to patiently wait until more information can be given.
UPDATE: An aggrement for a $137.5 million settlement by Citizen's Bank has been approved by a federal judge. Final approval is anticipated at a hearing set March 7, 2013.
Related Article:
National City Bank Loses Class Action Lawsuit Against Improper Overdraft Fees
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