A Miami judge has given final approval to the $410 million Bank of America settlement in a class-action lawsuit that accused the bank of charging excessive overdraft fees to millions of debit-card customers. U.S. District Judge James Lawrence King approved the settlement, which will give account holders as much as 45 cents on the dollar on their claim. Customers will automatically receive the payment since no paperwork is necessary.
There were objections to the settlement and to attorneys’ fees. The court found that the settlement was fair and adequate and reasonable. It was also recognized by the judge that the lawyers had worked very hard on the case. There were about 40 law firms and hundreds of lawyers involved in the case on the Plaintiffs’ side.
Lawsuits from around the country, which claimed banks charged excessive fees when debit-card users made purchases that exceeded their balances, were consolidated in 2009 in Miami. Bank of America was the first to settle among about 35 U.S. banks named in the class-action litigation. Other major banks include JPMorgan Chase, Citigroup, Wells Fargo and San Francisco-based Union Bank, which recently agreed to a $35 million settlement. That settlement has yet to be approved in court.
The Bank of America settlement benefits the bank’s customers who used their debit cards since 2001 and were charged overdraft fees as a result of “debit re-sequencing” — or the order in which postings were processed. The lawsuit charged that banks waited to process charges until days after a purchase was made, when users’ accounts were depleted; or manipulated charges so that large purchases that would deplete an account would be processed first, triggering overdraft fees on smaller purchases made earlier. Because some debit card users from the early years cannot be identified, the court set aside about 12.5% of the settlement for educational institutions that teach consumers about financial and banking practices.
Source: Miami Herald
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