Fifth Third Bancorp has agreed to pay $9.5 million in a proposed settlement with customers who claim they were improperly charged debit card overdraft fees caused by the bank’s policy of manipulating the sequence of posted transactions.

The settlement of the class-action lawsuit, filed Nov. 21, 2009, in U.S. District Court in Northern Illinois, covers customers who had a Fifth Third account between Oct. 21, 2004, and July 1, 2010, and who incurred at least one debit overdraft fee.

The complaint alleges that Fifth Third’s computers are configured to alter automatically the sequence of transactions so account balances “can be manipulated to exhaust the available balance more quickly and in fewer transactions than if they were processed in chronological order.”

In a statement, while Fifth Third admitted no wrongdoing, “we felt that it was in the best interest of the company to settle this matter and move forward.” The bank also agreed to begin posting debit card and ATM transactions in the order in which they occur, regardless of amount, beginning “in early 2011.”

A hearing to approve the settlement is scheduled for March 16.

Wells Fargo & Co. in August lost a lawsuit on related issues when a federal judge ordered the bank to pay $200 million in restitution to California customers who claimed Wells unfairly charged them debit card overdraft fees. That suit also alleged that Wells deliberately manipulated transactions to trigger overdraft fees (see story). Wells is appealing the ruling.

A separate class-action suit against several banks also was filed in Florida. Defendants include Wells Fargo, Wachovia Corp., Citigroup Inc. and JPMorgan Chase & Co. (see story). 

Chase changed its transaction-posting policy in March so that all of its customers’ debit card and ATM transactions are posted in chronological order.


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