Number of people who are part of deal is higher than first thought.
About 2.7 million people have received notifications this month that U.S. Bank owes them refunds as part of a $55 million overdraft settlement.
The number of postcards that went out to class members is notably higher than initial estimates of how many people would get payments under the agreement, first announced in July 2012.
The deal settles claims that the Minneapolis-based lender for years wrongfully boosted the overdraft fees it charged on debit card transactions by reordering transactions to post charges from largest to smallest amount instead of when they occurred. That type of resequencing can draw down customer accounts faster and more frequently, multiplying fees.
The pact is part of a mass of class-action litigation over the high-to-low overdraft practices that has generated more than a dozen bank settlements in recent years. Three banks, including Wells Fargo, are still fighting the lawsuits, said Robert Gilbert, the Coral Gables, Fla., lawyer representing bank customers.
U.S. Bank maintains that there was nothing wrong about the posting process and that it has not violated any laws.
The massive litigation has beaten back the high-to-low reordering practice — U.S. Bank and others stopped it — but some lenders still do it. “We think it should just be prohibited,” said Susan Weinstock, director of the Safe Checking in the Electronic Age Project at the Pew Charitable Trusts.
Overdraft fees in general remain a big money generator, and the Consumer Financial Protection Bureau is investigating bank and credit union practices. In 2011, consumers shelled out $16.7 billion in overdraft fees, according to the Center for Responsible Lending.
The U.S. Bank settlement has a final hearing in December, and U.S. District Judge James Lawrence King in Miami must still sign off on it. Checks aren’t likely to go out until next summer. Gilbert said he can’t estimate an average check amount.
Heather Jenkins isn’t expecting much.
When the postcard about the U.S. Bank overdraft settlement came, she wasn’t entirely sure what it was about. All she really remembers, she said, is that years ago when she worked as a grocery store cashier, her overdraft fees at U.S. Bank snowballed so badly the bank wound up garnishing her entire paycheck.
“I know I was pregnant at the time with my daughter and I wasn’t getting any checks,” Jenkins recalled. “It wasn’t able to buy her anything. It was all going to the bank.”
Jenkins, a 27-year-old nurse’s aide now in Grove City, Ohio, said it was several years before she did business with a bank again.
A U.S. Bank spokesman called Jenkins’ example extreme and said overcharges related to reordering transactions probably had little to do with her financial situation.
“That’s not a reflective case here,” U.S. Bank spokesman Tom Joyce said.
The 2010 lawsuit filed in Washington state against U.S. Bank accused the lender of charging Lori Brown and her son Mitchell eight overdraft charges totaling $300 in a two-day period. If the transactions had posted chronologically, the Browns would have been charged just one overdraft fee of $37.50, it said.
People won’t get back all the money they paid for reordered transactions, Gilbert said. In U.S. Bank’s case, the $55 million represents just 13 percent of the estimated total damages that could have been recovered had the overdraft case gone to trial.