Court approves BofA's $410M overdraft settlement

AP News
Posted: May 24, 2011 5:18 PM
Court approves BofA's $410M overdraft settlement

A Florida court has given preliminary approval to Bank of America Corp.'s $410 million settlement of a federal lawsuit accusing the bank of charging excessive overdraft fees.

The Charlotte, N.C. bank will place $410 million in an escrow account that will be divided among 1 million customers who were charged the high fees. According to a court filing Monday, the Southern District Court of Florida granted preliminary approval for the settlement. A hearing has been set for Nov. 7 for final approval.

The bank had reached the settlement in February.

In the lawsuit, consumers alleged the bank processed its debit card and check payments in a way that caused more overdrafts. Customers pay overdraft fees when they spend more money than they have in their accounts.

Many customers would find that they would be charged a fee of $35 for insignificant purchases such as a cup of coffee. Before federal law changed this summer, banks frequently charged overdraft fees on numerous transactions in a single day.

New regulations put in place after the financial crisis bar banks from charging overdraft fees on debit cards without first getting customers' approval.