Bank Overdraft Fees Class Action Lawsuit Results in $90M Settlement

According to the terms of an agreement announced Tuesday in Miami federal court, PNC Bank has agreed to pay $90 million dollars to settle a class-action lawsuit over excessive overdraft fees charged to customers.

The overdraft fees lawsuit is one of about 30 similar complaints that have been filed against major U.S. banks, alleging that transaction entries were altered to generate greater overdraft fees. Similar settlements have been reached by JP Morgan Chase, Bank of America, and TD Bank.

According to the complaint filed against PNC Bank, transactions were resequenced so that the largest withdrawals were deducted first, instead of being cleared in the order in which they were received. This resulted in customers’ balances diminishing faster, which generated a larger number of overdrawn transactions.

Bank overdraft fees occurs when withdrawals from a bank account exceed the available balance. In such cases, banks charge a fee for the overdrawn transactions from the account holders.

Previously, if there were insufficient funds, checks were returned and the account holders were charged for that. However, banks found it easier to generate revenues through overdraft fees by allowing customers to overdraw their accounts by debit purchases, ATMs, or through any other electronic payment methods.

As part of the PNC bank overdraft fees settlement, liability was not admitted and the agreement must be approved by U.S. District Judge James Lawrence King, who is presiding over all similar lawsuits filed in U.S. District Courts throughout the United States.

PNC Bank part of the PNC Financial Services Group, Inc. (NYSE: PNC) one of the nation’s largest diversified financial services organizations. With assets of $296 billion. PNC, operating primarily in 19 states and the District of Columbia, provides retail and business banking; residential mortgage banking; specialized services for corporations and government entities, including corporate banking, real estate finance and asset-based lending; wealth management and asset management. The company is located in Pittsburgh, PA.