Bank of America must face overdraft fee refund lawsuit
Reuters
Published Apr 04, 2024 11:19AM ET
Updated Apr 04, 2024 11:31AM ET
By Jonathan Stempel
(Reuters) - Bank of America must face a lawsuit claiming it reneged on a promise to refund overdraft fees to customers facing financial hardship because of the COVID-19 pandemic.
U.S. District Judge Yvonne Gonzalez Rogers (NYSE:ROG) ruled on Wednesday that customers plausibly alleged that the bank misled them on its website and mobile app by continuing to promise relief from overdraft and insufficient fund fees, after it had quietly ended its "Client Assistance Program" on Aug. 31, 2020.
The second-largest U.S. bank began the program five months earlier to address the pandemic's impact on its 66 million individual and small business customers. Many banks offered their customers comparable relief.
According to the complaint, Bank of America misled customers into believing it was better to incur $35 overdraft fees than borrow from family members or obtain loans, because the fees would be refunded under the program.
Rogers, based in Oakland, California, concluded that the plaintiffs "sufficiently pleaded that defendant advertised a program when none existed."
She also called it "plausibly deceptive" for Bank of America not to formally disclose it had ended the program, even as it promised to offer refunds on a "case-by-case" basis.
In seeking a dismissal, the Charlotte, North Carolina-based bank said reasonable customers would not have viewed a formal announcement as material, and that it never promised refunds for months or years as pandemic conditions eased.
Bank of America declined on Thursday to comment on the decision. Lawyers for the plaintiffs did not immediately respond to requests for comment.
In January, the U.S. Consumer Financial Protection Bureau proposed curbing overdraft fees at large banks, reducing the typical $35 fee to as little as $3 and potentially saving consumers $3.5 billion a year.
The Bank of America case had been led by California truck driver Anthony Ramirez, California manufacturing worker Mynor Aldana and New Jersey retired widow Janet Hobson.
Each said the bank refused to refund hundreds of dollars of overdraft and insufficient funds fees imposed in 2020, 2021 or 2022.
The case is Ramirez et al v. Bank of America NA, U.S. District Court, Northern District of California, No. 22-00859.
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Written By: Reuters
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