Class Action Claims Bank of America Charges Multiple Overdraft, NSF Fees for Single Checks [UPDATE]
by Erin Shaak
Last Updated on December 7, 2023
Checchia v. Bank of America, N.A.
Filed: May 19, 2021 ◆§ 210501685
A lawsuit claims Bank of America has violated the terms of its contracts by charging multiple fees when an accountholder has insufficient funds to cover a check.
December 7, 2023 – $8M Bank of America Fee Settlement Receives Final Approval
The settlement detailed below received final approval from the court on September 21, 2023, paving the way for payments to be made to class members.
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According to the official settlement website, NSFODFeeCheckSettlement.com, the $8 million settlement fund will be divided among class members on a pro rata basis after administrative expenses, service awards and attorneys’ fees are deducted. The website states that the bank has also agreed to cease its practice of charging more than one fee on a check that is re-presented for payment for at least five years.
If you received a notice of the settlement by mail or email, it means Bank of America’s records have indicated that you are a class member entitled to a benefit. The court’s final approval order memo relays that notices were sent to 358,248 individuals.
Per the website, class members do not need to do anything to receive a share of the settlement fund. The site states that individual payments will be distributed to eligible class members after any objections or appeals are resolved.
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July 22, 2022 – Bank of America Settles Overdraft Fee Class Action for $8 Million
A Bank of America customer has asked the court to approve an $8 million settlement to resolve the proposed class action detailed on this page.
The plaintiff’s motion for preliminary settlement approval says that the proposed deal provides “substantial relief” to current and former Bank of America checking and savings account holders in the U.S. who, between May 19, 2017 and the date of preliminary approval, paid (but were not refunded for) a non-sufficient funds (NSF) or overdraft fee in connection with (a) an automated clearing house (ACH) entry on their account that was submitted by a merchant (or a merchant’s bank) with a “REDEP CHECK” indicator or (b) a physical check that was re-presented for payment after having initially been returned for non-sufficient funds and charged an NSF fee within the previous 28 days.
Court documents add that Bank of America (BANA) “ceased the practice at the heart of this Action,” i.e., charging more than one fee on a check re-presented for payment, after the suit was initially filed. As a result of the proposed settlement, Bank of America has “committed to not re-establish this practice for at least five years,” the motion states.
“BANA is one of the first major U.S. banks to do so,” the motion reads. “BANA’s agreement in this regard to that Practice Change will no doubt result in significant intangible value for the Settlement Class and future BANA Accountholders.”
The motion relays that the total value of the settlement is thus “outstanding” considering the cash and “intangible” benefits to consumers.
Those covered by the deal, which awaits preliminary approval, will automatically receive their share of funds from the settlement without having to submit a claim form or prove that they were damaged.
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A proposed class action claims Bank of America, N.A. has violated the terms of its customer contracts by charging multiple fees when an accountholder has insufficient funds to cover a check.
The lawsuit out of the Philadelphia County Court of Common Pleas claims that while Bank of America’s account statements specify that it may charge a single insufficient funds (NSF) fee or overdraft fee when it rejects or pays a check due to insufficient funds, the bank routinely charges a new fee each time it reprocesses the same item. According to the case, the bank’s account documents do not disclose that “this counterintuitive and deceptive result” could be possible, and instead “suggest[] the opposite.”
“As alleged more fully below, it is a breach of BofA’s Account Documents (defined below) and reasonable consumer expectations for BofA to charge more than one $35 NSF Fee and/or OD Fee on the same check, since the Account Documents explicitly states—and reasonable consumers understand—that the same check can only incur a single NSF or OD Fee,” the complaint reads.
The lawsuit argues that Bank of America has “unlawfully maximize[d] its already profitable fee practice” by charging double fees per item.
Bank of America’s deposit agreement and fee schedule specify that the bank will charge a $35 NSF fee if it rejects a check for insufficient funds, or a $35 overdraft fee if it pays the item, the case explains. What consumers are not told, however, is that each time a check is reprocessed after being initially rejected, the bank treats it as a “new and unique item” subject to an additional fee, the suit says.
“A check initially rejected for insufficient funds, especially through no action by the customer, cannot and does not fairly become a new, unique item for fee assessment purposes,” the complaint contends, alleging that Bank of America has violated the terms of its contracts with consumers.
The plaintiff, a Pennsylvania resident, says he wrote a $75 check in January 2017 that Bank of America initially rejected due to insufficient funds in his account. Per the case, the bank charged the plaintiff a $35 NSF fee, which the man does not dispute as this fee is allowed by Bank of America’s account documents. A few days later, however, the defendant reprocessed the same check and this time paid it into overdraft, charging the plaintiff an additional $35 overdraft fee, the case relays.
The plaintiff says he took no affirmative action to resubmit the check and did not write an additional check. Per the case, the plaintiff understood the check to be a single item that would be subject to only one fee considering there is “zero indication” in the defendant’s account documents that the same item may incur multiple fees.
“In sum, BofA promises that one $35 NSF Fee or OD Fee will be assessed per check, and these terms must mean all iterations of the same instruction for payment,” the complaint attests. “As such, BofA breached the contract when it charged more than one fee per check.”
The lawsuit looks to cover Bank of America checking account holders in the U.S. who, during the applicable statute of limitations period, were charged multiple NSF fees or OD fees on the same check. The case also proposes a state-specific subclass of Pennsylvania residents who meet the same criteria.
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