What makes this Bank of America $410 million class action settlement special is that it’s over a basic consumer banking business practice. For years, banks have been processing your daily transactions in order from highest to lowest, rather than real-time. They say they’re doing us a favor so that if we have a check bounce, it’s the one for the babysitter and not the mortgage payment. But this class action suit claims that Bank of America did this to unjustly enrich itself. It’s one of over 60 lawsuits against various banks for similar practices, and it could reshape the entire industry.

Here are the list of questions of law and fact in the BofA case, which are just hilarious because they largely describe common banking practices:

44. Among the questions of law and fact common to the Classes are whether Bank of
America:
a. Does not clearly disclose and/or refuses to allow its customers to opt out of its overdraft protection program;
b. Does not obtain affirmative consent from its customers prior to processing transactions that will result in overdraft fees;
c. Does not alert its customers that a debit card transaction will trigger an overdraft fee, and does not provide its customers with an opportunity to cancel such transactions;
d. Manipulates and reorders. transactions so that it can increase the number of overdraft fees it imposes;
e. Manipulates and reorders debits from highest to lowest in order to maximize the number of overdrafts and, consequently, the amount of overdraft fees;
f. Imposes overdrafts and overdraft fees” when, but for reordering transactions, there would otherwise be sufficient funds in the account;
g. Fails to provide customers with accurate balance information;
h. Delays posting of transactions by customers using debit cards so that customers are charged overdraft fees on transactions, even though the customers had sufficient
funds in their accounts to cover the transactions upon execution;
i. Charges exorbitant overdraft fees that bear no relationship to the actual costs and risks of covering insufficient funds transactions;
j. Breaches its covenant of good faith and fair dealing with plaintiff and other members of the Classes through its overdraft policies and practices;
k. Requires its customers to enter into standardized account agreements which include unconscionable provisions;
l. Converts moneys belonging to Plaintiffs and other members of the Classes through its overdraft policies and practices;
m. Is unjustly enriched through its overdraft policies and practices; and
n. Violates the consumer protection acts of certain states through its overdraft policies and practices.

For this particular class action, you’ll get a notice in the mail if you’re a class member, which is anyone who had a Bank of America debit card between Jan 2001 and May 24, 2011, and you’ll automatically get a payment or credit.

Until banks are forced to change this deceptive practice, there are a few things you can do to protect yourself from the reordered transaction shim sham. First, don’t opt-in to overdraft protection if the bank tries to get you to. No longer can they automatically put you in but that won’t stop them from trying to get you to sign up. Second, ask to set an upper limit to only allow overdrafts at a preset negative balance amount so you can keep the damage from hemorrhaging. Make sure to read your bank policies so that you know how many overdrafts they can charge you in a day and what the fees are. And always keep an eye on your account balance and know how much you have before you swipe or write a check, you shouldn’t be spending more than is currently in your account.

bofaoverdraftsettlement [Official Site]

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Customers challenge the way banks reorder debits in order to rack up overdraft fees [Denver Post]

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