Miami, FLAn overdraft fees lawsuit that had been given class-action status has had that class-action status confirmed by a Florida federal judge. The excessive overdraft fees lawsuit alleged that Wells Fargo Bank improperly reordered customer transactions to increase profits from overdraft fees. Wells Fargo is not the only financial institution accused of such actions. Various other banks and credit unions also face or have faced legal action.
At the crux of the issue is the allegation concerning the reordering of debits from the accounts of customers at financial institutions. Plaintiffs allege that rather than processing transactions chronologically, some banks and credit unions process transactions in order from highest dollar amount to lowest, pushing customers into overdraft more quickly than they should have been and increasing money made from overdraft fees.
Customers argue that marketing materials led them to believe bank accounts would be debited in the order transactions occurred. Some banks, for example, reportedly advertise that ATM transactions reduce the amount available in a bank account immediately, indicating once the transaction occurs the money is taken out.
Lawsuits were filed against numerous financial institutions, arguing that the reordering of transactions breaches customer contracts. In the case of Wells Fargo, U.S. District Judge James Lawrence King ruled in June that five lawsuits could go ahead as a class action. Wells Fargo requested reconsideration of that decision, arguing that the named plaintiffs could not stand as class representatives and that the class was inconsistently defined.
When he made the initial ruling on class-action status, Judge King noted that each of the classes had identical legal claims and were led by bank customers with “ample evidence to prosecute it.”
Some banks have forced customers to undergo arbitration to deal with claims regarding overdraft fees, but others, including JPMorgan Chase, Bank of America and Capital One, have faced lawsuits. Some of those lawsuits have been settled for millions of dollars. Capital One recently settled its overdraft fees lawsuit for around $30 million. That settlement reportedly affected around 610,000 customers. In agreeing to the settlement, Capital One did not admit any wrongdoing.
The Wells Fargo Lawsuit is In Re: Checking Account Overdraft Litigation, case number 1:09-md-02036, in the US District Court for the Southern District of Florida.
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