(Video correction: Overdraft fees are posted after the bank reviews accounts transactions for the day, not month.)

Millions of Americans have been hit with overdraft fees in the past decade. And a good number of them are eligible for refunds under the terms of settlements related to a class action lawsuit aimed at punishing banks for transaction reordering. TD Bank, Bank of America, Fifth Third and PNC have already reached an agreement with the courts. Other banks are waiting for the court to issue a final ruling.

The lawsuits allege that banks reordered transactions to generate the highest amount of overdraft fees possible. By arranging charges from highest to lowest, rather than in the order in which they were incurred, the banks maximized their profits because customers were charged for each overdraft they violated.

The class action lawsuits hitting many of the major banks who tried to get away with these unfair practices will give the customers a small overdraft fee settlement refund, usually much smaller than what they paid, due to lawyer fees and the large numbers of people included in the settlement. However, since many likely wrote off this money already, it is pretty much found money. And, luckily, a majority of customers will receive payments even if they do nothing. However, some will have to pay extra attention, such as customers who got hit with the fee before the records were as thorough, usually before 2005.


Chase has agreed to settle for $110 million with their customers affected by transaction reordering between Jan 1, 2001 to May 24, 2011, pending final approval from the Senior Judge James Lawrence King of the U.S. District Court for the Southern District of Florida. The bank will pay out to all customers who had a Chase consumer deposit account and debit card from Jan 1, 2003 and Mar 29, 2010, and were charged two or more overdraft fees caused by debits posted to the account from highest to lowest dollar amount on a single day during the time period listed above.

Customers will receive payment through direct deposit, or a check mailed to the last known address if the account has been closed, after the final hearing set for Dec 10, 2012, at which point they will be able to determine how much payments will equal. Most payments will be made automatically and if you want payment you do not need to do anything, but certain people will need to file a physical claim either online or by mail. These include overdraft fees in Chase accounts in 2003 – 04 and in Bank of New York accounts from Oct 2, 2006 through Mar 31, 2007. The deadline to file one of these claims is Feb 8, 2013.

If you were a Chase customer and affected by this settlement, you will automatically be included even if you did not receive any notice unless you opt out by mail before Nov 5, 2012.

Full details of the settlement including forms, lawyer and court information can be found here.

Other cases

Other banks are in the various stages of settling. Citizens Bank settled for $137.5 million, PNC for $90 million and TD Bank for $62 million, but all these three banks await court approval and will go through a similar process in the coming months, so check back here for full details including how to file a claim when you receive contact and the settlement is made public. Be aware that different banks employ different claim filing processes, and some, like Chase, will not require a claim at all.

Citibank and Wells Fargo find themselves in middle of the process and have not disclosed the amount of their settlements, but they will likely be relatively large considering their sizable deposits. You can expect to hear from these banks in the coming months about how to file a claim and when you can expect to receive payment. Wells Fargo is already awaiting to hear what will happen to a separate overdraft case.

Finally, some other banks have already finished the whole process. National City, acquired in 2008 by PNC, has settled for $12 million and finished accepting claims on Aug. 26, 2011, and has sent out payment to customers by now,  irrespective of PNC’s $90 million settlement. Fifth Third Bank settled for a measly $9.5 million while Bancorp South got off practically scott-free paying just $1.75 million. If you have filed a claim with any of these banks and have not received payment, your claim was probably denied, but you can still try calling the hotlines on the settlement pages to find out. If your payment was less or more than you expected, it means the courts misjudged how many claimants would file valid claims and had to prorate accordingly. In many settlements, claimants are entitled to up to three times the amount they claimed if there is enough money in the fund.

Bank of America settled in late 2011. Details on payments can be found here.

Details on other banks and where they stand in the settlement process can be found here.

Most recent case: TD Bank sued for unfair overdraft fees

Despite the $62 million settlement back in 2010, TD Bank has not changed their overdraft fee policy. This means that TD Bank customers may have still experienced abuse by the unfair policy for the last five years. Of course, this has not escaped scrutiny, and now TD Bank is once again being sued for unfair overdraft fees.

The plaintiffs assert that TD Bank has continued to process charges by amount instead of chronologically. This has led to customers being charged multiple overdraft penalties that would otherwise not have occurred. For example: if you have $10 in your bank account and you spend $2 in the morning and $12 in the afternoon, you should be charged one overdraft fee for the second purchase. TD Bank, however, has allegedly been processing the most expensive transaction first, incurring one overdraft penalty for the $12 charge and then a second penalty for the $2 charge.

Additionally, TD Bank is being accused of determining overdrafts by the available balance, as opposed to the ledger balance. The available balance is the balance TD Bank estimates you have available after all transactions are processed, while the ledger balance is how much money a customer actually has in the account. This means that TD Bank would purposefully subtract transactions from the smaller account in an attempt to incur an overdraft fee. According to the plaintiffs, about 10 percent of overdraft fees incurred would not have happened had TD Bank subtracted from the ledger balance.

This class action suit was brought against TD Bank on Jan. 8, 2015 and is currently ongoing.

How do these overdraft fee policies make you feel about your own bank? Have you been a victim of abusive overdraft fee policies?

Let us know in the comments below or share with the MyBankTracker community and leave a review for your bank.

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