RBS Citizens Financial and TD Bank received preliminary approval, by U.S. District Judge James Lawrence King in Miami, to settle class-action lawsuits involving the banks’ unfair practices that led to excessive overdraft fees for checking-account customers.
Citizens Financial will pay $137.5 million as part of its settlement agreement. TD Bank will pay $62 million. Twelve other banks have already settled, including Bank of America, Citigroup and Wells Fargo.
The lawsuits claim the banks increased the chances that customers were hit with overdraft fees by process transactions from largest to smallest, not chronologically. When larger transactions are processed first, account funds deplete more quickly — allowing smaller transaction to trigger multiple overdrafts.
The final approval of the settlements is scheduled for March 7, 2013.