Bank of America Corp (BAC.N) agreed to pay $75 million to settle a lawsuit accusing the second-largest U.S. bank of extracting overdraft fees it didn’t earn from customers with savings and checking accounts, court papers showed.
A preliminary settlement of the proposed class action was filed on Wednesday 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 $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 $105 after rejecting her $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 $35 fees.
One woman said the bank imposed $105 in fees after rejecting her $20 credit card payment, attempting without her knowledge to “retry” processing the same payment five and nine days after the initial rejection, resulting in three $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 $5.3 million a month and $318 million overall.
Bank of America denied wrongdoing in agreeing to settle. A spokesman declined to comment on Friday.
The plaintiffs’ lawyers intend to seek up to $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.
U.S. banks took in $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.
The case is Morris et al v. Bank of America NA, U.S. District Court, Western District of North Carolina, No. 18-00157.