A billion-dollar bank in the US is reportedly facing a potential class-action lawsuit for the second time in about three years over allegedly hammering customers with “crippling” overdraft fees.
Customers LaNita Criswell and LaSheena Neal say Frost Bank’s history of imposing $35 overdraft fees on transactions that do not exceed account balances is in breach of contract and in violation of the Electronic Funds Transfer Act, reports the San Antonio Express-News.
The plaintiffs say their proposed class-action lawsuit has at least 100 members seeking $5 million in damages from the billion-dollar lender.
Criswell and Neal say that when a debit card transaction was initiated on accounts with sufficient funds to cover the purchase, Frost went through a customer’s checking account to “sequester” funds for payment. But the bank “still assesses crippling $35 OD fees on many of these transactions and misrepresents its practices in its account contract.”
Frost Bank says it removed the fees in question last summer, and the Consumer Financial Protection Bureau (CFPB) recently published a proposed rule targeting similar so-called junk fees.
In 2021, Frost Bank was hit with a similar lawsuit when San Antonio resident Theodore Woods alleged that the lender practiced “unfair and unconscionable collection of overdraft fees.” Court documents show that the dispute was settled and the case was dismissed in August of 2022.
In June 2022, Frost Bank expanded its $100 overdraft grace period to protect participating customers from overdraft fees if they overdraw their checking accounts by as much as $100. But the bank says the feature “is a discretionary service” and it reserves the right not to pay items in certain cases such as when the account has a questionable standing, a record of making too many overdrafts or a history of not making regular deposits.
Frost Bank is one the largest 50 banks in the US with $50.8 billion in total assets and over 5,000 employees.
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- Source: https://dailyhodl.com/2024/04/12/billion-dollar-bank-accused-of-charging-crippling-overdraft-fees-as-customers-launch-5000000-lawsuit-report/
