Union Bank to Settle $35 Million Overdraft-Fee Litigation
Union Bank NA will settle a lawsuit over its overdraft-fee policy for $35 million, according to a filing in federal court in Miami.
U.S. District Judge James Lawrence King ruled in September that Union Bank would have to defend the civil claims.
Customers claimed in more than 30 nationwide lawsuits that more than 30 banks process checking account debit card transactions non-sequentially to deplete the accounts and trigger overdraft fees.
Last year, the Federal Reserve imposed rules prohibiting lenders from automatically charging fees when consumers have insufficient funds for electronic or debit transactions.
Bank of America, the second-largest U.S. lender, goes to court Nov. 7 for final approval of its $410 million settlement announced in February. The Charlotte, North Carolina-based bank doesn’t admit liability.
At least five suits in other states that weren’t part of the multidistrict suit but claimed the same overcharge-fee practices have settled.
Daniel Weidman, a spokesman for San Francisco-based Union Bank, declined to comment on the settlement.
“We’re very happy that we could come together with Union Bank,” said Aaron S. Podhurst, attorney for the plaintiffs. “I think it will be a very fair settlement.”
A written settlement agreement will be submitted to the court in about 45 days, according to court documents. The Union Bank settlement covers 350,000 non-commercial customers who were charged overdraft fees from January 2005 to August 2010 as a result of “resequencing” of checks, Podhurst said. Under this practice, checks for higher amounts were cleared first, causing checks for smaller amounts presented on the same day to bounce, Podhurst said.
The case is In Re Checking Account Overdraft Litigation, 09-cv-02036, U.S. District Court, Southern District of Florida Miami).
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