Back in 2009, this blog warned about how banks can manipulate their computers to charge consumers excessive fees. This month, Bank Of America started notifying customers about its proposed rebate program to settle a class-action lawsuit about overdraft fee abuses.
The bank has set up a $410 million fund to provide rebates to customers charged excessive overdraft fees, as a result of the bank's alleged processing debit card transaction by size rather than chronologically and not declining transactions after an account is overdrawn. You are automatically included in the rebate program if you had both a Bank of America consumer checking and/or savings account and debit card between January 1, 2001 and May 24, 2011, and were charged one or more overdraft fees.
There is an important deadline of October 3, 2011 if you want to exclude yourself from the settlement and retain the right to individually sue Bank of America about this issue. To learn more, visit www.bofaoverdraftsettlement.com or call 1-800-372-2390. If you disagree with the proposed settlement agreement, then you (or your attorney) must provide your objection about it to the court by the same October 3 deadline. The court will have a hearing on November 7 to consider approving the proposed settlement agreement.
I saw a legal notice about the proposed settlement in the August 8, 2011 print edition of Sports Illustrated magazine (page 67). Frankly, the print legal notice is clearer and easier to understand:
"The lawsuit claims that Bank of America processed debit card transactions in order of highest to lowest dollar amount to maximize the number of overdraft fees assessed to its customers. Specifically, the lawsuit claims that, instead of declining transactions when an account had insufficient funds to cover a purchase, Bank of America authorized the transactions and then processed them in highest to lowest dollar amount order..."
Despite legislation by Congress, the problem of excessive overdraft fees continues. According to the Miami Herald:
"A survey released Wednesday by the Consumer Federation of America found that the median overdraft fee is $35, the same as it was last year. The highest fees also remain $33 to $37 per overdraft. The fees can be triggered if customers overdraw their checking accounts by as little as $5. In addition, the survey found that two-thirds of banks continue piling on fees if customers fail to balance their accounts within a set time. For example, JPMorgan Chase charges an "extended overdraft" fee of $15 after each five-day period that an account stays in the red."
So, the legislation may have somewhat improved how banks process your debit card transactions with more frequent disclosures, but when you overdraw your account the fee amount you pay remained high. And, there are lots of new fees.
What's a consumer to do? Move your money to a local bank or credit union.