How many times has this happened? Desperate for a caffeine jolt, you stumble into a Starbucks and order a $2 tall coffee. As usual, your wallet is bereft of cash, so you whip out the debit card to pay the bill.
In your sleep-deprived state, you forget that you just paid rent. The checking account is empty. Later that afternoon, when you look online, you find that $2 coffee morphed into a $37 cup of joe thanks to your bank's hefty "overdraft fee."Doesn't seem right, does it?
That's what a team of lawyers, led by two Miami attorneys, is arguing in the Southern District of Florida courts. And yesterday they won a big victory against Bank of America, CitiBank, and four other major banks.
In a 50-page decision, a federal judge tossed out a motion to dismiss the case, setting the stage for the lawyers to get a class action suit certified -- which could eventually force the banks to pay you back for all of those fees they took over the years.
"These banks really abused their discretion when it came to overdraft fees," says Robert Gilbert, one of the Miami attorneys representing dozens of local plaintiffs. "Working-class people living paycheck-to-paycheck were the hardest hit."
Gilbert's suit argues the banks defrauded customers by not offering them a choice whether to participate in "overdraft protection," which allows debit cards to overdraw checking accounts in exchange for big fees.
Moreover, Gilbert says, banks didn't warn consumers when they were about to overdraft.
"No reasonable person would ever choose to pay a $35 fee for a coffee that costs a couple of bucks," he says.
Worst of all, his suit alleges, banks deliberately reordered customers' transactions -- often putting big checks or withdrawals first -- to purposely overdraw their accounts and hit them with overdraft fees.
Congress has moved this year to force banks to drop the practice. And one big player -- Bank of America -- just announced this week it's abandoning all overdraft fees.
But Gilbert says bank customers deserve to be paid back all the overdraft fees they suffered over the years -- a sum that would top hundreds of millions of dollars.
"They did this for one reason and one reason alone: to make a profit off unsuspecting customers," he says.
The courts will now consider whether to certify the case as a class action suit.
