Bank of the West is on the brink of settling a lawsuit targeting its overdraft fee practices, making it the 10th bank to buy its way out of a massive Florida class action case.
Plaintiffs' attorneys asked Judge Lawrence King to suspend all activity in the case pending the submission of a formal agreement in a notice filed in U.S. District Court for the Southern District of Florida.
"Plaintiffs and defendant advise the court that an agreement in principle has been reached for a full and complete settlement and release of all claims brought against Defendant," they wrote, adding that the proposed terms will be presented to the court within 45 days. Terms of the pending settlement remain undisclosed.
The broader litigation alleges that 30 bank-defendants manipulated the order in which customers' debit card payments were processed in order to maximize the fees charged and often sought to hide their actions By reordering a customer's transactions so that the largest charges were processed first, banks depleted their accounts at an accelerating rate and charged them additional overdraft fees. Banks have generally argued that customers prefer to have large items paid for first.
The defendants in the case have generally not fared well. Bank of America was the first to settle, agreeing to a $410 million settlement last year that accounted for slightly fewer than 10% of the overdraft fees it is alleged to have wrongfully charged. Subsequent settlements have recovered a higher portion of alleged damages. For example, the $83.5 billion asset Union Bank has agreed to a $35 million settlement, roughly 40% of alleged damages (see story).
Bank of the West, which is owned by BNP Paribas, has just under $62 billion in assets.
Aaron Podhurst, a lead attorney for the plaintiffs, said in an interview last year that he and the other lawyers on the case hoped to recover as much as 70% of the plaintiffs' alleged damages in future settlements.
On Jan. 20, one of Podhurst's colleagues had no immediate comment on the Bank of the West deal.
Jim Cole, a spokesperson for Bank of the West, said in a statement that the company was "pleased to have resolved this matter."
"The Bank has modified our procedures, so we now post debit card transactions in chronological order whenever time-stamp data is available," he wrote. "When time-stamp data is not available, we post debit card transactions from low to high."
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