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It’s an unusually low percentage. A key reason for that, according to Gilbert, is that U.S. Bank tried to move the disputes out of court and arbitrate them privately and individually.
The bank insists that its agreements don’t make arbitration mandatory. But while the agreements do allow either side to choose to arbitrate a dispute, if one side chooses arbitration, the other side is obligated to participate.
Banks that invoked arbitration in the overdraft litigation settled for significantly lower amounts than banks that didn’t, Gilbert said. Union Bank in San Francisco, for instance, didn’t invoke arbitration and settled for about 63 percent of estimated damages, according to Vanderbilt Law School professor Brian Fitzpatrick.
Fitzpatrick said many of the banks in the litigation had arbitration clauses in their account agreements, but didn’t invoke them in time, and so the overdraft lawsuits proceeded in court.
Gilbert said the U.S. Bank case was settled before the courts determined whether U.S. Bank’s argument for arbitration would be upheld. Given the risk of getting zero for customers in arbitration, 13 percent looked pretty good.
Joyce, at U.S. Bank, disputed the notion that arbitration issues were key in its settlement.
“The settlement was based on a variety of factors,” Joyce said, “including a customer agreement that expressively permitted the former posting order.”
Arbitration clauses have become even more common and difficult to fight after a number of U.S. Supreme Court rulings in recent years that essentially upheld a company’s right to enforce arbitration to block consumers from taking their disputes to court. Then the court’s landmark 2011 decision in AT&T Mobility LLC vs. Concepcion upheld the right of companies to use arbitration to block consumers from pursuing class-action lawsuits specifically.
“It’s a killer for consumers,” Gilbert said. “It has been a tremendous adverse impact upon protecting the rights of consumers through this country.”
Customers also sued Wayzata-based TCF Financial Corp. over high-to-low reordering, but the lawsuit was dismissed and customers ordered to arbitrate their disputes.
People who received postcards in the U.S. Bank case aren’t required to do anything to get the refund.
The case is not about paper checks and focuses only on overdraft fees linked to debit cards. To be eligible for a refund, you must have had two or more overdraft fees in a single day that were reordered debit card transactions that resulted in overcharges.
The time frame differs by state. For people with U.S. Bank accounts that were opened in Minnesota, the time frame is Oct. 19, 2003, through Aug. 15, 2010.
For more information, go to http://www.usbankoverdraftsettlement.com/ or call toll free at 1-888-398-8207.
Jennifer Bjorhus • 612-673-4683