Banks are under fire over their practices, and a class-action lawsuit has a chance to get them to pay you back. But what exactly is an overdraft fee, and how can you prove that you’ve been charged excessively for it? In this article, we’ll discuss three potential targets of such litigation: HSBC, Capital One, and Bank of America. Hopefully, the results of the lawsuit will inspire them to change their practices.
HSBC Bank USA
The plaintiffs in Extended Overdraft Fee Lawsuits against HSBC Bank USA have filed separate class actions in various U.S. District Courts. Two of these cases are pending in the E.D.N.Y., whereas the other two are pending in the E.D.Va. court. In each case, the plaintiffs are alleging that HSBC failed to disclose the high fees, and their financial institution has failed to provide them with adequate disclosures.
The plaintiffs are challenging HSBC’s practice of posting debit card transactions to checking accounts. HSBC argues that its practice violates Gutierrez and does not preempt state law. It further contends that the Plaintiffs’ claims violate federal law and interfere with its power as a national bank. This case will now proceed in state court. We’ll continue to follow this case as it progresses.
In a recent decision, a U.S. appeals court reinstated a proposed class-action lawsuit against Capital One Financial Corp. based on a breach of contract and New York state consumer protection law. The bank has not yet responded to requests for comment. However, it has agreed to waive its right to a jury trial in such cases. Regardless, this case will provide a crucial first step in the litigation process.
Consumers have long complained about overdraft fees. According to the Consumer Financial Protection Bureau, these fees cost consumers $15 billion each year. Banks have been accused of illegally assessing the fees by paying merchants before authorizing a transaction. A customer with $100 in a checking account would face a single overdraft fee if the transactions were settled in order, but five if the bank settled the cases out-of-order.
Bank of America
A putative class action has been filed against Bank of America over its practices of levying an overdraft fee of $35. The overdraft fee amounts to interest, but it doesn’t stop there. Bank of America often charges an additional fee for retrying the same transaction if there are insufficient funds. A customer may be able to fight this by demonstrating that they were overdrawn for longer than five days.
In the Bank of America extended overdraft fee lawsuit, the bank agreed to settle for about $66.6 million in exchange for a promise not to charge the overdraft fee for the next five years. The settlement amounts to nearly six million dollars, which will be shared by the plaintiffs and the bank. Thousands of consumers have filed for relief. Bank of America is expected to cease overdraft fees as soon as 2022, and lawyers estimate that the savings will be $1.2 billion for consumers.
The amount of the settlement has not yet been decided in the Extended Overdraft Fee Lawsuits against the HSBC bank. However, in February 2016, the U.S. District Court granted the bank’s motion to dismiss the lawsuit. As a result, the settlement amount will be determined in April. Nonetheless, it will be helpful to note that a majority of the claims have been resolved.
The cases were consolidated in May 2013 and the Judicial Panel on Multidistrict Litigation approved the consolidation. Plaintiffs named HSBC Bank USA, HSBC Canada, HSBC Bank UK, and HSBC Ireland. The case is now pending in the Eastern District of New York. HSBC’s defense attorneys have been working on the case for the past year.