Bank of America could owe you a refund for overdraft fees
If you paid an overdraft fee on your Bank of America account, you might be due some cash thanks to a lawsuit settlement over how the bank cleared its debit card transactions at your expense.
Last week, the Associated Press reported the banking giant agreed to set up a $410 million fund to repay eligible customers for overdraft fees the bank charged between January 2001 and May 2011.
BofA is one of some three dozen banks named in a series of class-action suits that challenged the practice of check reordering, a sneaky little moneymaker that banks resorted to in the go-go 2000s.
The settlement lets BofA officially off the hook for its transgressions; the other suits will continue to work their way through a federal court in Florida.
With reordering, the banks would deduct purchases from an account starting with the largest dollar amount first. If your account was running low, you could end up paying additional overdraft fees as a result.
For example, say you have $80 in your account and in one day you make these three debit purchases in succession: a $5 latte, a $25 lunch and a $60 dinner. If your transactions were calculated in the order received, you would only be charged one overdraft fee for your dinner. But with the largest-purchase-first reordering, you'd be hit for two because your $60 dinner payment would be cleared first.
Banks took in $39 billion in overdraft fees annually by using this technique before the Federal Reserve called a halt to it last year, which makes that $410-million settlement by BofA look more like the tip on a mighty profitable dinner.
If you had a BofA account during the period, you don't have to make any moves to get your refund; payments or account credit will be made automatically if the court approves the settlement in a hearing scheduled for Nov. 7.
That said, if you want to decline the settlement and thus move forward with legal action of your own, you have to do so before Oct. 3. Learn more about your options at www.bofaoverdraftsettlement.com or call the toll-free 1-800-372-2390 for more information.
AP notes that up to 30% of that $410 million fund may go to cover attorneys' fees and costs, pending court approval.
I guess reordering isn't dead after all.
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