Bank of America Corp has agreed to a $75 million preliminary settlement for charging multiple overdraft fees on transactions for checking and savings accounts.
What is an overdraft fee?
When a customer attempts a purchase with insufficient funds, many banks charge users an overdraft fee for the failed transaction. The practice is highly profitable for banks, which took in $12.4 billion in profits from overdraft fees alone in 2020.
Repeated overdrafts can result in account closures and leave some lower-income customers without access to banking services. Banks have long been under scrutiny for the practice, but the pandemic inspired temporary waivers on fees. Some banks are even opting to eliminate the fees altogether.
How is Bank of America different?
But Bank of America charged numerous overdraft fees when the payment is “retried” without the user’s knowledge. Customers accumulated overdraft charges for the same transaction over and over.
One woman reported the bank imposed $105 in fees after rejecting a $20 payment. Despite her attempts to stop using the card, the bank recharged her 5 and 9 days later.
In addition to $75M settlement, Bank of America agreed to waive the fee on retry payments for five years. As a result, customers will save approximately $318 million, which breaks down to around $5.3 million a month.
We can help.
If you have been the victim of unwarranted overdraft fees by Bank of America or any other financial institution, please contact our firm’s consumer protection attorneys. You can reach out by phone at (919) 526-0450 or by email at info@MaginnisHoward.com.
You can also reach our firm through our contact page, and we’ll respond as soon as possible.