Bank Overdraft Fee Lawsuits


Class action attorneys investigating deceptive banking practices & reviewing unfair bank overdraft fee claims
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When Should You File a Bank Overdraft Fee Lawsuit?

Your bank charges an “overdraft fee” when the funds in your account are not enough to cover a purchase or payment. The moment you notice an unreasonable overdraft fee in your account, it’s important to act right away — contact your bank to ensure they stop charging you, and reach out to an attorney to discuss your rights and potential legal actions.

You’re likely not the first person to be blindsided by an unauthorized overdraft fee, and you certainly won’t be the last until the bank is legally obligated to cease its overdraft practices. By contacting an attorney, you could join or prompt the formation of a class action lawsuit — a group claim that can save time and legal fees for you and other plaintiffs dealing with the same issue. In class actions, the strongest case is selected to represent the rest, and all class members share in the results of just one comprehensive decision.

If you have an issue with bank overdraft fees, it could be a case of fraud. Your decision to speak with an attorney today could ensure you claim your share of an impending class action suit, or your case could be the one that reveals the problem. Contact The Lyon Firm at our Cincinnati offices by calling (513) 381-2333 or by filling out our online form to schedule a free consultation. One call could begin a process that compensates you, alerts others, and prompts industry-wide reform for unfair overdraft practices.

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How Many Times Can a Bank Charge Overdraft Fees?

The maximum number of bank overdraft fees charged each day differs between banks. However, most banking institutions cap their charges between 4-6 overdraft fees per day (though some banks may charge as many as 12 fees to a person’s account in a 24-hour period).

There are four main types of overdraft fees charged by financial institutions:

  1. Overdraft Fees: This standard charge is issued each time a bank approves a transaction that is higher than the balance of your funds. Many banks do not charge this fee if the discrepancy is less than $5, but that threshold differs between institutions.
  2. Non-Sufficient Funds Fees (NSFs): This fee is charged each time a bank rejects a transaction because there is not enough money in your account to cover the amount. This fee amount is often the same as the overdraft charge, but an overdraft and an NSF fee should never apply to the same transaction. The bank either accepts or rejects the transaction, and applies the appropriate fee.
  3. Overdraft Protection Fee: If you have sufficient funds in your savings account that can cover charges in your debit account, the bank may transfer those funds to “protect” you from an overdraft. That protection also charges a fee, but legally cannot be enacted automatically — you must opt-in to receive this service. It usually costs less than an overdraft fee, especially considering that you can be hit with multiple overdrafts during one statement period without notification that something is wrong.
  4. Extended Overdraft Fee: Also known as an “extended overdrawn balance fee” or “sustained overdraft,” this may be charged if an account balance sits in the negative for a certain amount of time, like 5 business or 7 calendar days. Some banks charge this fee once every 5 days, while others may apply the fee every day until a checking account balance is above zero. The maximum amount of extended overdraft fees also varies between banks.

These fees form a progressive chain that can quickly devastate a person’s finances. In one day, and without notification, a bank may reach their maximum of overdraft fees, and then continue charging NSF fees, increasing the amount you owe. After a week, they can start piling on extended overdraft fees as well. This chart shows the timeline of how one overdraft fee can compound:

One overdraft fee can cause a chain reaction that devastates your finances.

This means that after just one paycheck error, a person could be in debt for a substantial amount of money in one month between bank statements. These kinds of unexpected fees could compromise a person’s ability to pay rent, afford transportation to work, or pay for childcare, food, or medicine. A lawsuit can help you recover what you lost, and possibly change these practices before they victimize others.

Many Americans are just one missed paycheck away from homelessness. The numbers vary between 40% pre-pandemic to nearly 60% in recent years. Silent overdraft fees from banks could push a family out of their home, permanently altering the trajectory of their future.

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ABOUT THE LYON FIRM

Joseph Lyon has 17 years of experience representing individuals in complex litigation matters. He has represented individuals in every state against many of the largest companies in the world.

The Firm focuses on single-event civil cases and class actions involving corporate neglect & fraud, toxic exposure, product defects & recalls, medical malpractice, and invasion of privacy.

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The Firm offers contingency fees, advancing all costs of the litigation, and accepting the full financial risk, allowing our clients full access to the legal system while reducing the financial stress while they focus on their healthcare and financial needs.

Can You Sue Banks for Overdraft Fees?

Yes, you can file a lawsuit against a bank based on their overdraft fees. Consumers should have the ability to sign up for a checking account that offers reasonable and clear bank overdraft fees. A consumer fraud protection lawyer can help assert your rights.

Here are examples of damages settlements from previous bank overdraft fee lawsuits:

  • Bank of America agreed to settle a $410 million lawsuit that alleged it collected multiple overdraft fees on individual transactions from checking and savings account customers. The bank has said it will stop charging multiple fees every time it reattempts a single payment for years.
  • TD Bank agreed to pay over $62 million in a bank overdraft settlement to resolve claims that the bank breached agreements by charging fees on items already assessed with a non-sufficient funds (NSF) fee.
  • A $5.7 million class settlement against NBT Bank for creating the circumstances that would charge their customers overdraft fees. They did this through a practice of allegedly reducing a customer’s checking balance to a lower “available balance” after a debit transaction was authorized but before it was settled.

Lawsuits regarding bank overdraft fees are often joined into one large entity known as a class action suit. Class actions are formed when a group of individuals is impacted by the same issue, like bank users across the country being hit with unfair overdraft fees.

Consumer protection attorneys argue that banks should be held accountable when they fail to meet the basic expectations of their customers, or fail to offer straightforward bank policy.

Bank customers who have been effectively fleeced by deceptive checking overdraft fees and unfair banking policies may be able to file bank overdraft fee lawsuits. The Lyon Firm is investigating unfair banking practices, and reviewing a wide variety of class action litigation for plaintiffs nationwide. Contact us at (513) 381-2333 for representation.

Is It Illegal for Banks to Charge Overdraft Fees?

No, it is not illegal for banks to charge you overdraft fees. However, in some cases, the way in which they construct those charges may be considered deceptive billing practices, and there are some protections for bank users.

Here are key facts about overdraft fees:

  • Federal law dictates that bank clients must opt-in and agree to overdraft protection before a bank or credit union may charge an overdraft fee.
  • According to the Consumer Financial Protection Bureau (CFPB), overdraft fees constitute the largest cost for customers opening a checking account
  • The average penalty for an overdraft is over $30, according to the Federal Deposit Insurance Corporation (FDIC). These fees rise consistently in small increments, but cost consumers billions every year.

Overdraft fees directly profit the banks which make the rules consumers must follow. There is a real incentive for banks to purposefully allow overdraft fees, as those fees efficiently transfer your money to their pockets.

For example, you can overdraw your account through checks, ATM transactions, debit card purchases, automatic bill payments, and electronic or in-person withdrawals. Banks may be reordering your transactions for the purpose of charging you more.

Many who are overly penalized feel that the system is stacked against them. But while overdraft fees are not illegal by any means, a skilled lawyer can argue they are structured in a deceptive manner. By building such a case, your attorney can secure justice for you and other bank users across the country.

Customers should be able to reasonably expect that their transactions will be processed chronologically — not highest to lowest, which makes each transaction more likely to overdraw an account and churn profit for a bank.

What Is the Maximum Amount a Bank Can Charge in Overdraft Fees?

Unfortunately, no, there is no firm cap on what a bank can ultimately charge you in overdraft fees. Federal laws do not set any maximum amount, and each bank individually decides the amount of their fee, and how many times they’ll charge you for overdrafts on a single day.

After a bank’s chosen maximum overdraft limit is reached, other charges start to apply. Those debts carry the same penalties for non-payment that would occur if you were unable to cover the cost of a purchase.

Banks are only required to inform you in advance when the amount of the fee changes, but not when you are being repeatedly charged. If you find your bank’s practices to be unfair, it’s possibel that the law may agree. Contact an attorney to discuss your options.

How Do I Claim Back Overdraft Fees? Contact an Attorney

When you pursue legal action due to unfair overdraft practices, you are not alone. These types of cases often grow into class action lawsuits that can potentially help every account holder across the nation. Not only can you claim back overdraft fees that are found to be deceptive, you can also help prevent this kind of treatment from negatively impacting others.

The Lyon Firm has the experience, resources, and dedication to take on difficult and emotional cases. Joe Lyon is an experienced Cincinnati Class Action Lawyer with proven success in representing individuals and plaintiffs in all fifty states.

You need not worry about complex civil litigation matters. Our firm helps our class action clients obtain the justice deserve. Regardless of whether a case settles or goes to a jury trial, that work is our job, not yours.

Reach out to us online or by phone at (513) 381-2333. The Lyon Firm is dedicated to building the strongest class action cases possible for clients and their critical interests.

Bank Overdraft Fee Lawsuit FAQs

What are the requirements for a class action lawsuit?

Class actions must meet the requirements of the state they are filed in. The Lyon Firm is headquartered in Ohio, where there are seven requirements for maintaining a class action under Ohio Rule of Civil Procedure 23:

  1. The class must be identifiable and unambiguous (such as all bank customers who were charged certain types of overdraft fees, or subject to particular overdraft practices)
  2. The named representative whose case will stand for the rest must be a member of the class
  3. The class must be so numerous that it is impracticable for all to be heard in one hearing or trial (greater than 40, it is presumed)
  4. There must be questions of law or fact common to the class
  5. The claims or defenses of the representative must be typical of the class
  6. Representatives must fairly and adequately protect the interests of the class
  7. One of the three requirements under 23(b) must be met, meaning that while the plaintiff need not show a precise damages amount, they do need to show that class members all suffered an injury

When an Ohio Court is analyzing these factors, “any doubts” about class representative should be resolved in favor of upholding the class.

Do I have to join a class action to file a bank overdraft fee lawsuit?

No, you do not have to join a class action lawsuit in order to file your own claim. However, unless you have a particularly unique set of damages to be addressed, a class action may be your best option to receive a swift resolution and the best possible compensation.

A qualified class action attorney can advise you either way, based on your specific circumstances. Contact our offices for a free consultation to discuss your options.

How long do class action lawsuits take to settle?

Some cases are resolved in a matter of months, while others can be litigated for years. Some companies wish to settle quickly to minimize a PR backlash while others fight until the end, taking each case to trial. Your lawyer should be prepared to go all the way to trial if that is what the case requires, and only agree to a settlement if the offer is in the best interest of the class.

How long do I have to file a bank overdraft fee lawsuit?

For a class action lawsuit, the deadline to join will be made clear in your notification letter or in the publicly available information regarding the case. If you do not sign up in time, you will lose your claim to share in the results of the final class action award.

For an individual lawsuit, each state has its own filing deadline for cases involving matters like contract claims, deceptive billing, and consumer protection. Depending on your circumstances, time may be running out, so it’s crucial to speak with an attorney as soon as possible so you don’t miss the window. Contact The Lyon Firm at (513) 381-2333 to discuss your legal options.

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Serve as a Class Representative to Help the Class

Why are Class Actions Important?

Without class actions, large corporate defendants would be able to cause small amounts of harm over a large group of individuals without any risk of monetary penalty.

Class Action allow a Plaintiff who would ordinarily not have access to the Court bring a collective action.  Class Actions enforce regulatory statutes & common law caused of action that keep companies honest and hold them accountable when they deceive the public or fall below acceptable industry standards. 

Class Action vs. Mass Tort: The Value of Consolidation

There is power in numbers. By joining forces with others who have suffered similar injuries or circumstances, individuals are able to access better results at a faster rate.

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Recent Class Action Cases

The Lyon Firm investigates and litigates class action cases involving Invasion of Privacy, TCPA, Consumer Fraud, Data Breach, and Deceptive Sales Practices, Mortgage Satisfaction, Mortgage Satisfaction Violations, and Financial Fraud.

Class Counsel Appointments and Experience:  Joseph Lyon has been appointed as Co-Lead Counsel in State and Federal Class Action Cases.

Data Breach & Privacy Lawsuits

Invasion of privacy law has been established to protect consumers and citizens of the United States. When companies are negligent and fail to protect consumer information, which can be used in malicious ways, victims can contact a class action attorney to represent them in class action data breach lawsuits. A number of privacy breach and data breach claims have been settled by The Lyon Firm and other consumer protection lawyers around the country.

Consumer Protection Class Action

Consumers have rights in the USA, and when companies do not provide a service they have promised, or hold up their end of a bargain, legal action may be necessary. Consumer protection attorneys work on your behalf to hold companies responsible for providing a fair and safe service.

The Lyon Firm has worked with law firms nationwide in consumer class actions involving deceptive marketing, false advertising, food mislabeling and misleading marketing claims.

TCPA Robocall Class Actions

TCPA lawsuits have become one of the most common kinds of legal claims. The TCPA Act provides privacy protection for consumers by restricting how companies and organizations can contact you by telephone. Robocall harassment and unfair debt collection has been a serious issue that has required lawsuits in order to keep telemarketing companies at bay.

If you have experienced telephone harassment by a bank, real estate company, hotel, political campaign or anyone else, you may have TCPA claim. The Lyon Firm works diligently to seek compensation for those harassed at their home or work.

Wage and Hour Lawsuits

Class action wage and hour lawsuits are always ongoing, as some employers fail to treat employees properly, and attempt to cut workers out of earned wages. Wage theft lawsuits can be valuable for a class of plaintiffs who believes their employer has cheated them out of overtime pay and other earned wages.

There have been several wage theft lawsuits and settlements that have compensated employees for the wages they have earned, as well as damages for emotional distress and punitive damages when an employer is negligent in treating workers in accordance to Ohio labor law.


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