On September 14, 2014, disbursement of a $55 million dollar settlement began arriving in the accounts of affected U.S. Bank customers. Twelve U.S. Bank customers filed a class action lawsuit on behalf of themselves and other customers affected by the fee-gathering practices of U.S. Bank. Specifically, the customers were suing over the bank’s practice of intentionally processing debit card transactions in order from highest to lowest dollar amount in order to maximize overdraft fees charged to customers whose accounts held insufficient funds. U.S. Bank continues to claim they did nothing wrong by processing transactions in this manner. Settlement money will continue to arrive in the accounts of affected customers through the 29th of September. Those customers who have questions will be directed to the U.S. Bank Overdraft Settlement Support Website.
U.S. Bank is not the only bank who has taken part in what should be a blatantly underhanded practice of reordering debit card transactions to create overdraft fees which would not have existed otherwise. A June 2013 article by Forbes.com writer Halah Touryalai describes in detail how this process can unfairly increase costs to consumers. This specific behavior is often justified with a statement that banks are not nonprofits, thus a customer should not expect to receive their services for free. This sentiment was expressed by Sandy McCraren, president of a community bank in Highland Park, Illinois, in a June 2013 article by Marcie Geffner of Bankrate.com. While defending bank fees universally, McCraren also stated that while “we would love to be able to give everything free, we can’t…” Judging from the settlement paid out by U.S. Bank and the investigation by the Consumer Financial Protection Bureau, this condescending excuse of an excuse for charging excessive fees is not going to hold water moving forward.
Investigation of Overdraft Fee Practices
In February of 2012, the Consumer Financial Protection Bureau, an agency of the United States Government charged with enforcing federal consumer financial laws, launched an investigation into the practice of charging overdraft fees to bank customers. Specific concerns cited included transaction re-ordering which increases costs to consumers, withholding information from consumers, providing consumers with confusing information and misleading marketing materials, and the disproportionate impact overdraft fees have on low-income and young consumers. These concerns persisted despite the federal banking reforms enacted in 2010 which included the requirement that banks must allow customers to opt in for overdraft protection on their debit cards as opposed to forcing them to opt out if they do not want to participate. A June 2014 article in the New York Times suggests that overdraft fees are still a concern for many consumers and remain a major source of income for banks, which collected $16.7 billion in such fees in 2011.
U.S. Bank has reached a $55 million dollar settlement in a class action lawsuit with twelve of its customers who represented all current and former U.S. Bank customers who have been charged overdraft fees due to having their debit card transactions reordered from highest to lowest amount. Excessive overdraft fees charged by banks have been the subject of several articles, investigations, lawsuits, etc. in the last five years or so. Those who believe they may be due a disbursement from the U.S. Bank settlement should visit the U.S. Bank Overdraft Settlement Support Website.