PaymentsJournal
No Result
View All Result
SIGN UP
  • Commercial
  • Credit
  • Debit
  • Digital Assets & Crypto
  • Digital Banking
  • Emerging Payments
  • Fraud & Security
  • Merchant
  • Prepaid
PaymentsJournal
  • Commercial
  • Credit
  • Debit
  • Digital Assets & Crypto
  • Digital Banking
  • Emerging Payments
  • Fraud & Security
  • Merchant
  • Prepaid
No Result
View All Result
PaymentsJournal
No Result
View All Result

Overdraft Fee Lawsuits Draw Attention to Issuer Practices

By Mercator Advisory Group
May 25, 2011
in Analysts Coverage
0
0
SHARES
0
VIEWS
Share on FacebookShare on TwitterShare on LinkedIn

561395

Bank of America settled the class action lawsuit on overdraft fees filed against them with a $410M payback to cardholders. This suit has drawn unwanted attention to the back office configuration of posting systems, since the suit alleged that the bank processed transactions in a manner designed to maximize overdraft fee income – something the bank denies occurred. In its comments on the settlement, Bank of America has called for a standardized solution that could be used throughout the industry.

The Wall Street Journal reports the agreement will send money to more than 1 million BofA customers and former customers. It’s the result of several similar lawsuits against multiple banks being consolidated in Miami federal court.

The consolidated suit alleged the bank “systematically” resequenced debit transactions in order to maximize the bank’s overdraft fee revenue. Many banks allegedly used a system in which debit transactions were recorded with the largest transaction first, not in chronological order, thereby leading a customer’s account to dwindle faster.

The bank denies the allegations in the settlement. A spokeswoman reiterated Monday it was “pleased to reach a fair resolution to this matter” and was “advocating for a standard solution that would ensure a consistent posting order approach across the industry.”

It’s possible that Federal regulators will push the industry to a standard before it volunteers a solution, since the FDIC has included processing system configuration in their most recent Overdraft Guidance document, now in its commentary period.

Click here for more.

0
SHARES
0
VIEWS
Share on FacebookShare on TwitterShare on LinkedIn

    Get the Latest News and Insights Delivered Daily

    Subscribe to the PaymentsJournal Newsletter for exclusive insight and data from Javelin Strategy & Research analysts and industry professionals.

    Must Reads

    commercial card, Allpay ClearBank Prepaid Payments, wealth transfer

    How Banks Can Capture the Wealth Transfer from Boomers to Gen Z

    June 20, 2025
    embedded lending

    Embedded Lending as a Growth Strategy for ISVs—How to Maximize Revenue Potential

    June 18, 2025
    merchant ai

    Merchants Find More Use Cases for AI Amid Risks

    June 17, 2025
    prepaid payroll

    Taking the Check Out of Paycheck: The Role of Prepaid in Payroll

    June 16, 2025
    Banking-as-a-service BaaS

    Remodeling Main Street: How Community Banks Can Leverage the Banking-as-a-Service Paradigm

    June 12, 2025
    How Employee Performance Enhances the Customer Experience

    Three Strategies to Maximize Loyalty in the AI-Driven World 

    June 11, 2025
    PFM tools

    How FIs Are Cutting Through Subscription Clutter with PFM Tools

    June 10, 2025
    child identity theft

    Stranger Danger: Protecting Your Children from Identity Theft

    June 9, 2025

    Linkedin-in X-twitter
    • Commercial
    • Credit
    • Debit
    • Digital Assets & Crypto
    • Digital Banking
    • Commercial
    • Credit
    • Debit
    • Digital Assets & Crypto
    • Digital Banking
    • Emerging Payments
    • Fraud & Security
    • Merchant
    • Prepaid
    • Emerging Payments
    • Fraud & Security
    • Merchant
    • Prepaid
    • About Us
    • Advertise With Us
    • Sign Up for Our Newsletter
    • About Us
    • Advertise With Us
    • Sign Up for Our Newsletter

    ©2024 PaymentsJournal.com |  Terms of Use | Privacy Policy

    • Commercial Payments
    • Credit
    • Debit
    • Digital Assets & Crypto
    • Emerging Payments
    • Fraud & Security
    • Merchant
    • Prepaid
    No Result
    View All Result