BBVA Compass Settles Overdraft Suit for $11.5 Million

BBVA Compass agreed to pay $11.5 million to settle a lawsuit accusing the bank of improperly manipulating customers’ checking-account transactions to generate excess overdraft fees, according to a court filing.

U.S. Bank NA also reached a settlement, agreeing to pay $55 million, according to another filing today in federal court in Miami. Plaintiffs’ lawyers announced the U.S. Bank agreement yesterday. Neither bank admitted liability, and the agreements are subject to court approval.

Consumers sued more than 30 banks, claiming the banks resequenced the actual order of transactions, posting them in highest-to-lowest dollar amount instead of the chronological order, leading to excess overdraft fees. Those cases were consolidated before U.S. District Judge James Lawrence King.

PNC Bank, a unit of PNC Financial Services Group, reached a $90 million settlement in June. Toronto-Dominion Bank, Canada’s second-largest bank, entered in May a preliminary agreement to pay $62 million to settle overdraft claims. In April, Citizens Bank agreed to pay $137.5 million. In February JPMorgan Chase & Co., the biggest U.S. bank by assets, reached an agreement for $110 million.

“We have made changes to the way we handle customers’ accounts in recent years, and we will continue to look for opportunities to enhance our consumer products,” Teri Charest, a spokeswoman for U.S. Bank in Minneapolis, said in an e-mail.

“We are pleased to resolve this matter,” Shane Clanton, general counsel for BBVA Compass, said in an e-mail. “Even before this lawsuit was filed, BBVA Compass began to develop a banking platform designed to post many transactions, including debit card transactions, in chronological order. Many of these transactions will be posted in real time as they occur.”

The platform is being used in Colorado and is being rolled out across the bank’s franchise, Clanton said.

The case is In re Checking Account Overdraft Litigation, 09-md-02036, U.S. District Court, Southern District of Florida (Miami).

To contact the reporter on this story: Susannah Nesmith in Miami at susannahnesmith@yahoo.com

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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