District Court granted final approval of a $5.7 million class action overdraft fee settlement

Courts Overdraft Fees Consumer Finance Class Action Settlement

On April 22, the U.S. District Court for the Northern District of New York granted final approval of a $5.7 million class action settlement resolving allegations related to overdraft fees applied to certain bank account transactions. According to plaintiffs’ unopposed motion for preliminary approval, the bank was sued in 2020 for allegedly unfairly assessing and collecting overdraft fees on “Authorize Positive, Purportedly Settle Negative Transactions” (APPSN fees) as well as NSF fees. The bank denied the allegations and moved to dismiss, contending that the relevant account agreements are unambiguous, and that even if there were, “extrinsic evidence resolves the ambiguity in its favor on the whether the fees at issue are permitted.” In August 2021, the parties notified the court that they had reached an agreement. Under the terms of the preliminarily approved settlement, the bank will make a $4.25 million cash payment and will “forgive, waive, and agree not to collect an additional” $1.5 million in uncollected overdraft fees. Class members, defined as all current and former bank customers with consumer checking accounts who were charged a relevant fee between December 4, 2013, and November 30, 2021, will automatically receive their pro rata share of the settlement fund without having to prove they were harmed from the bank’s practices. There are no claim forms, and class members will be determined through the bank’s checking account data. A formula will be used to calculate each class member’s distribution. Under the terms of the settlement approximately $2.9 million will go towards customers who were charged APPSN fees, while roughly $1.3 million will be allocated for customers who were charged retry NSF fees.