Last week, I received a postcard with an “Important Notice About Bank of America Settlement” from “Claims Administrator” in Faribault, Minn. It seems that my wife and I are in line for our cut of a $410 million class-action settlement from Bank of America (BOA) because of its practice of creating overdraft fees. BOA recently faced a civil suit because it posted debit-card transactions from highest to lowest dollar amount—regardless of the order that the consumer made purchases or payments. As a result, this could create multiple overdrafts instead of just one.
A couple of years ago, BOA pulled a fast one of this fashion on the Reid family, in my opinion. Yeah, we spent too much one weekend, and we should have been charged an overdraft fee. But by ordering the transactions in the manner that it selected, BOA created two additional fees. For example, if we'd had transactions for $3, $4, and $30 in that order but only had $28 in the bank, you would think that you'd get one overdraft fee. Instead, BOA might designate the $30 expenditure as the first transaction, meaning the $3 and $4 transactions also would bounce.
When I protested at my local branch, I received a speech about overdraft protection (which I added to the account).
I still wasn’t satisfied, so I wrote a letter to BOA corporate offices. I never heard back from anyone.
Well, a lot has happened in the years since then. BOA and other institutions' practices were called into question when the banking industry found itself in financial quicksand and in need of government bailout. A new federal consumer-advocacy agency, the Consumer Financial Protection Bureau (CFPB), also has been established in the wake of such banking institution shenanigans.
Travis Plunkett, legislative director of the Consumer Federation of America (CFA), tells the Chicago Tribune that the new bureau is needed “because massive regulatory failures by federal banking and consumer regulators led to a proliferation of unfair and unsustainable lending practices, particularly in mortgage and credit card sectors.”
One of the CFA’s pet peeves is manipulation of overdraft fees, and the CFPB is looking into the practice nationwide.
BOA, which according to the postcard “maintains there was nothing wrong about the posting process used,” reached settlement of a case which was filed in Florida. Visit bofaoverdraftsettlement.com for details on the case and settlement. It's interesting reading.
As for the Reids, if we do nothing and the settlement is approved on November 7, then we will receive a payment or account credit of an unknown amount. The November hearing also will determine a request for attorney’s fees, costs, and expenses up to 30 percent of the money remaining in the settlement fund.
If I want to sue BOA on my own, then I can opt out of the class-action settlement by October 3. I can hire an attorney to represent me at the November 7 hearing, or I could appear myself and make my pitch against the lawyers’ fees or a bigger cut for the Reid family, I presume. That hearing will be held at the United States District Court for Southern District of Florida in Miami, at the James Lawrence King Federal Justice Building.
I would go, but I doubt we have enough money in our account right now.
Commentary by Alvin Reid
