District court dismisses class action overdraft fee claims

Courts Overdraft Consumer Finance Class Action

On March 31, the U.S. District Court for the Northern District of Illinois dismissed proposed class action overdraft fee claims brought against a national bank and the national bank’s parent company. The plaintiff argued that the bank unfairly charged him overdraft fees for debit transactions he made using two separate merchant debit cards (known as “decoupled debit cards”) that linked to his bank account. The plaintiff contended that because the bank’s contract language stated it would not charge overdraft fees on “non-recurring” debit transactions, this language should control despite the fact that the decoupled debit cards were not issued by the bank. The plaintiff brought multiple claims against the bank, including “breach of contract, breach of the covenant of good faith and fair dealing, unconscionability, conversion, and unjust enrichment.” The bank moved to dismiss for failure to state a claim.

The court first dismissed all claims brought against the national bank’s parent company, saying that the plaintiff combined and conflated the two entities. The court then dismissed with prejudice the plaintiff’s claims against the national bank for breach of the implied covenant of good faith and fair dealing, conversion, and unjust enrichment. The court also dismissed, but without prejudice, the claims against the national bank for breach of contract and unconscionability, although the court noted that the bank’s contract language “only applies to debit cards or access devices that were issued by [the bank], unlike the decoupled debit cards at issue here.”