SHAMIS & GENTILE, P.A., CLASS ACTION LAW FIRMBank Overdraft Fee Class Action Lawsuit

Are you being charged multiple NSF / bank overdraft fees?

If you were overdrawn on your bank account, why is your bank charging you an overdraft fee? That’s what thousands of hard-working Americans want to know. Numerous bank overdraft fee lawsuits have been filed against some of the country’s largest banks alleging that their overdraft fees are outrageous and taken without consent. People are now seeking to get that hard-earned money back.

There is a multi-district litigation (MDL) going on right now where many customers have already filed bank overdraft fee class action lawsuits. While not all banks have been sued or are involved in litigation, many are currently being investigated. There are no costs involved in the process of filing a bank overdraft lawsuit, according to bank overdraft fee lawyers. The law firms take care of all the expenses of the case, the filing of the pleadings and the costs associated with retaining experts.

Bank Overdraft

Overdraft Protection

What is the Bank Overdraft Protection Law?

The overdraft protection law stops banks from automatically enrolling customers in overdraft coverage. The coverage allows banks to process transactions when customers have insufficient funds. Banks usually charge a fee for each of these transactions.

In 2010, the Federal Reserve declared that by default a bank must reject transactions if an account lacks sufficient funds. However, customers can choose to change the default status and opt-in to overdraft coverage, if the bank offers the service. Transactions would be approved, but the bank could charge fees.

The law only applies to transactions that are not pre-authorized, such as ATM withdrawals and debit card transactions. Pre-authorized withdrawals, such as automatic bill payments and checks, do not fall under the umbrella of the overdraft protection law and can still lead to overdraft charges.

What Is the Overdraft Protection Offered by Banks?

Overdraft protection provides the customer with a valuable tool to manage their checking account. If you’re short a few dollars on your rent payment, overdraft protection ensures that you won’t have a check returned for insufficient funds, which would reflect poorly on your ability to pay. However, banks provide the service because of how they benefit from it – namely, by charging a fee. As such, customers should be sure to use the overdraft protection sparingly and only in an emergency.

The dollar amount of overdraft protection varies by account and by the bank. There are pros and cons to using overdraft protection. Often, the customer needs to request the addition of overdraft protection. If the overdraft protection is used excessively, the financial institution can remove the protection from the account.

Overdraft Fees Lawsuit
Overdraft Fees for Pending Payments

Can You be Charged Overdraft Fees for Pending Transactions?

Yes. Many transactions are processed overnight. These transactions may not be reflected in an available balance. This is why it’s important to keep a current and accurate check/transaction register and balance it to your monthly statement. A bank’s online, telephone or ATM balances are for information purposes only – they do not replace your check/transaction register.

On checking accounts, banks generally post deposits before withdrawals. However, the law does not require this. In addition, banks may establish a cutoff time for deposits made at a branch or through an ATM. Deposits made after that time may be treated as having been made on the following business day.

For example, a deposit made after the Friday afternoon cutoff time would be treated as if it were made on the following Monday. So any items with next-day availability would then be available the next day (Tuesday).

How Does Bank Card Authorization Holds Affect Overdraft Fees?

A pending debit card authorization alters the available balance in your account. If that reduced available balance is not sufficient to cover other transactions that post or clear your account that evening, then overdraft fees could be charged. As a result, the account is overdrawn and a fee is charged.

How Can Irregular Deposits by the Bank Affect Your Overdraft Fees?

When several items come to the bank for clearing, it can choose to debit them from your account in several ways. Many national banks are opting to post the largest dollar items first instead of posting the checks in numerical order. Often the largest check represents payment for rent, mortgage, car payments or insurance premiums. If your bank adopts this policy throughout its territory, it normally will notify you via your statement. Frequent deposits can cause overdrafts that are a financial burden, especially because the fees are oftentimes hidden and unpredictable. These fees cause many consumers to leave the banking system.

Card Authorizations affect Overdraft Fees

Can You File a Bank Overdraft Fees Lawsuit?

Yes. Some customers who have been affected by unfair overdraft fees or deceptive overdraft practices have begun by filing a bank overdraft fees lawsuit against their banks and credit unions. If you have been subjected to unfair overdraft fees or deceptive practices at Pacific Western Bank or another financial institution, you may be able to join a bank overdraft fees lawsuit. 

After you retain counsel and provide documentation to show that you were unlawfully charged a bank overdraft fee, your lawyer will prepare a complaint and file it. After that, there’s going to be a lot of discovery that goes on regarding the bank’s procedures. At some point, a judge will determine whether or not what the bank did was lawful or unlawful practice.

What Is the Difference between a Bank Overdraft and NSF Fees?

An overdraft fee is charged when the account goes into the negative and Overdraft Privilege (ODP) is being used. ODP will pay items in the event your checking account does not have sufficient funds to cover them.

A non-sufficient funds (NSF) fee, or NSF item fee, is charged when your account is overdrawn, and the item is returned unpaid. You will be charged this NSF returned item fee if you don’t have funds in your account to cover the item and have not opted into ODP, you have exceeded your transfer limits or if you have exceeded the negative limit.

Not Sufficient Funds

Non-Sufficient Funds (NSF)

How Do Non-Sufficient Funds Work?

Banks often charge an NSF fee when a presented payment is returned due to insufficient funds. A similar fee may be assessed when honoring payments from accounts with insufficient balances. The latter scenario describes an account overdraft (OD), which is often confused or used interchangeably with NSF.

The fees many banks charge for NSF checks are a point of contention between consumers and banks. Consumer advocates allege that since fees are usually a fixed amount, a customer may, in effect, be paying extraordinarily high interest rates for relatively small deficits in their accounts.

Banks provide a few options to their customers to help them avoid the penalties associated with an insufficient funds transaction. Account holders can choose to opt out of certain overdraft policies that allow the bank to cover charges and add an NSF fee. Account holders usually also have the option to link a backup account such as a savings account. With a linked account the funds required for the transaction are taken from the linked account which can serve as a second source of funds.

non-sufficient fees
Monitor Bank Account

What Are Multiple Returned Item Fees?

When consumers write a check, they generally assume that their check will go through and that there is sufficient money in their account. However, something as simple as an unexpected bill or a miscommunication with a spouse can result in unexpected fees such as multiple returned item fees.

These fees are charged by a bank when a payment exceeds the amount in an account, or when a check is “bounced”. A consumer may also incur these fees when attempting to withdraw money from an ATM.

The highest maximum is found in Delaware where returned check fees can reach $40. In Florida, Georgia, Louisiana, and Ohio, maximums are calculated based on the amount a check is worth. Websites like WalletHub have resources available for consumers to check what the maximum returned payment fee is under their state’s laws.

According to OppLoans, the easiest way for consumers to avoid non-sufficient fund or returned payment fees is to balance their checkbook and keep an eye on account balances. This makes sure that consumers do not write checks that exceed the amount in their checking account.

You can receive an NSF fee for every transaction someone attempts to pass through your account, as many times as they try to pass it through. A person can attempt to deposit a check or make an electronic transfer multiple times. It is the number of transactions being handled that creates the NSF fees not the account being overdrawn.

What Is the Process to File an NSF Fee Lawsuit?

If you were charged with more than one NSF return item fee for a single transaction, you may be able to file a lawsuit or join a class action lawsuit. Another issue some consumers are reporting with their banks is the assessment of multiple NSF fees, or non-sufficient funds fees, for a single transaction.  Shamis & Gentile, P.A. is investigating bank overdraft and NSF Fees charged by Credit Unions, HSBC, Banco Popular (Popular Bank), Valley national and many others.

Setting up automatic bill pay for those monthly recurring payments or bills can simplify your life, or it can cause you a headache when you are hit with an overdraft fee.

Shamis & Gentile, P.A. is investigating banks who are charging their clients for overdraft fees when a recurring payment causes your account to go into overdraft.

For example: a customer may be charged more than one overdraft fee for a single recurring transaction that fails to go through. Essentially, the bank would charge one NSF (or overdraft fee) as it should, after the transaction fails to go through initially. But then, a bank might attempt to process the recurring transaction a second time soon thereafter, already knowing the account has insufficient funds, thus being able to charge a second NSF (or overdraft fee).

An example of this would be you have $50 in your account.  Your membership at your gym tries to do its monthly payment of $65.  Your bank hits you with an NSF fee (or overdraft fee) of $35 because there isn’t enough money to cover the transaction.  THEN – the very next day your gym tries the recurring payment again, and your bank hits you with another $35 NSF fee (or overdraft fee).

NSF Lawsuit
unfair non-sufficient funds fees

Are You Being Charged Unfair NSF Fees?

Check your bank account regularly and make a note of your expenses and bank charges. Question your bank when needed if you have any queries on suspicious activity. Other ways to prevent NSF fees include:

  • Setting up text or email notifications that alert you when your balances are below a certain level.
  • Avoiding opting out of overdraft coverage and simply have the card declined if there are insufficient funds.
  • Most banks offer to link a checking account to a savings or money market account, so that money transfers from the savings account to the checking account when there is not enough money in the checking account to cover the transaction. Opt-in for this option if possible.
  • Carefully monitor the balances in the accounts as well as individual transactions

Why choose Shamis & Gentile, P.A. for Your
Overdraft Fee Class Action Lawsuits and Settlements

We look at the law differently! Shamis & Gentile, P.A. has and continues to provide outstanding legal services in most of the Florida and New York communities. Shamis & Gentile, P.A. distinguishes itself because of our experience and legal resources to handle virtually any case involving personal injury, personal injury protection, class actions/mass torts, and contract disputes.

For more information on the Bank Overdraft Fee Class Action Lawsuit, contact us today.