BOA Pays $66.6M To Settle Overdraft Fees Lawsuit

Bank of America has reached a settlement in a lawsuit over extended overdraft fees, agreeing to pay consumers $66.6 million.

Citing a court filing, CNBC reported news that the settlement, which still needs the approval of the court, resolved a 2016 lawsuit that contended the bank’s extended overdraft fees was really interest and, as a result, was subject to rules that prevented excessive fees.

The settlement will compensate close to 6 million Bank of America customers around the country who have been paying extended overdraft fees since as far back as February 2014. Bank of America agreed to stop hitting customers with extended overdraft fees for five years. That, lawyers said in the court filing, will save customers around $1.2 billion.

“Our litigation argues that extended or continuous overdraft fees like the ones Bank of America charged are actually abusive and extremely high-interest charges,” Jeffrey Kaliel, an attorney for the customers, said in an email to CNBC. “Bank of America accountholders will no longer have to endure these charges.”

The lawsuit contended customers were hit with a $35 fee when their bank account was first overdrawn and accrued an additional $35 fee if the account stayed overdrawn for five days. The first fee was because the bank honored the check even though the customer didn’t have the funds, but the second fee had no service attached to it, which the lawsuit argued was interest for being able to continue to use Bank of America’s money. The lawsuit pointed to one customer, who was charged $35 for being overdrawn for five days even though the negative balance in the account was for as little as $3.59 to $284.86, which, the lawsuit argued, would equal out to an interest rate of 897 to 71,170 percent.