A bank in Scranton, Pa., has agreed to pay $2.5 million to settle a class-action lawsuit that alleged it manipulated the posting of debit card transactions to increase chances customers would overdraw their accounts so it could maximize its profits from fees. First Liberty Bank & Trust, a division of Community Bank N.A., agreed to pay the funds to 48,976 members in the class-action suit who were charged overdraft fees between July 20, 2006, and Aug. 15, 2010. The lawsuit was filed in federal court in Scranton in 2012 by two customers.
The suit challenged First Liberty’s policy relating to multiple debit card transactions posted on a single day. It was claimed in the lawsuit that the bank posted the transaction with the highest dollar amount first, rather than posting transactions in the chronological order they were made. That allowed it to increase chances the charge would overdraw the account, earning the bank a fee of $32 per overdraft.
The lawsuit is among dozens of class action complaints relating to debit card fees that have been filed against banks nationwide. In November 2011, Bank of America settled one of the lawsuits for $410 million. A proposed settlement in the First Liberty case was reached in June and approved by U.S. District Judge Robert Mariani. The settlement of this case was approved last month by Judge Mariani.
In addition to the monetary settlement, First Liberty agreed to continue the policy of posting from lowest to highest for at least two more years, to limit the number of overdraft fees charged on any single day to four and to refrain from charging a fee unless an account has a negative balance of $5 or more. Jeffrey Ostrow, a lawyer with Kopelowitz, Ostrow, located in Fort Lauderdale, Fla., represented the Plaintiffs in the case. He did a very good job for the class.
Source: The Times-Tribune
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