When numerous bank customers accused Bank of America (BOA) for excessive overdraft fees, it turned into a class-action lawsuit against BOA and some of the biggest banks in the country. Complaints from customers accused the bank of rearranging the order the bank processed debit card transactions in order to maximize the overdraft fees the bank could charge. One Florida man sued for being charged over $500 in overdraft fees.
Bank of America is the First to Settle
Bank of America has agreed to a settlement in a recent class-action lawsuit brought on behalf of consumers, who accused the bank of manipulating debit card transactions to maximize fees charged when customers exceeded their account balances. BOA is one of 30 defendants which includes all the big banks such as Citibank, Wells Fargo, U.S. Bank and JPMorgan Chase. BOA will pay $410 million to settle its portion of the class-action lawsuit.
New BOA Policy
Bank officials are not responding to requests for further information. The lawsuit, however, may have played a role in the change in policy at the bank along with new banking rules that were imposed on overdraft fees in connection with debit card transactions. The new BOA policy states that if the account holder does not have enough money in his or her account to cover the debit card transaction, then the transaction is automatically declined. This should end consumers’ torment of being charged a $35 fee for even small overdrafts of a few dollars.
BOA Text Program
BOA also came up with a new consumer-friendly approach to the problem. It announced recently that it would roll out a pilot program early next year in which it would notify customers by text message that the proposed transaction they are trying to make will exceed the amount of money left on their debit card.
In that situation, the cardholder has one of two options. One, they can choose to complete the transaction and pay a $35 overdraft fee for the transaction to be approved. Even better, they can agree to deposit money into the account by 8 p.m. on the day of the transaction and the $35 overdraft fee will be waived.
Final approval of the Bank of America settlement is scheduled for November 7, 2011 in a Florida court.