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Federal Court Rules Consumers' Claims Against Nation's Leading Banks for Excessive Overdraft Fees May Proceed

In a 50-page opinion, Judge King found that Bank of America, Citibank, JPMorgan Chase, U.S. Bank, Wachovia and Wells Fargo, among others, were not entitled to dismissal of the complaints. Judge King rejected the banks' primary argument that its customers cannot bring private litigation to recoup excessive overdraft fees.

Judge King stated, "Plaintiffs have alleged sufficient facts-that, among other things, Defendants manipulated the posting order of debit transactions in bad faith so as to maximize the number of overdraft fees incurred." Consumers pursuing these lawsuits, Judge King concluded, are "not trying to prevent banks from engaging in the business of banking, they are merely asking the banks to do so in good faith."

Plaintiffs' lead counsel Bruce S. Rogow of Miami, Florida, commented on the Court's ruling: "We are pleased the Court recognized the strength of our arguments and look forward to litigating these cases to a successful conclusion for millions of consumers across the country who've suffered these unfair overdraft fees over the years."

"The collection of excessive overdraft fees, usually around $35 per transaction, impacts millions of Americans each year," explained plaintiffs' counsel Michael W. Sobol of Lieff Cabraser Heimann & Bernstein, LLP. "While all bank customers have been affected, these overdraft fee policies hurt the financially vulnerable the hardest, often creating a domino effect, resulting in even more fees."

Responding to Bank of America's recent announcement that it will cease charging overdraft fees on debit card purchases later this year, Mr. Rogow said: "The fact that Bank of America announced yesterday that these overdraft fees will no longer apply to debit card customers is a welcome, albeit belated, sign that change is finally coming. We hope the other banks will finally see the light as well, and all banks agree to return to their customers overdraft fees that the banks unjustly obtained."

The complaints were filed in the United States District Court for the Southern District of Florida in Miami, where all federal lawsuits brought against the banking industry for abusive overdraft fees have been coordinated before Judge King. Plaintiffs' lead co-counsel Bruce Rogow and Robert C. Gilbert work with a Plaintiffs Executive Committee comprised of the law firms of Golumb & Honik P.C., Lieff Cabraser Heimann & Bernstein, LLP, Podhurst Orseck P.A., Trief & Olk, Webb, Klase & Lemond, LLC, and Baron & Budd.

How Bank "Overdraft Protection" Works and Results in Excessive Overdraft Fees

Today, when customers open checking accounts, banks provide debit cards for the withdrawal of cash from ATM machines and the purchase of goods and services. Many bank customers are not aware that as part of the process of obtaining the debit card, banks automatically enroll their customers in "overdraft protection." The overdraft protection kicks in if the customer spends more than he or she has in the account to cover the purchase, up to a limit of a few hundred dollars.

Banks could simply decline to honor customer ATM or point-of-sale transactions if the account lacks sufficient funds, or could warn customers that if they go through with the transaction an overdraft fee will be assessed. In fact, until a few years ago, most banks simply declined debit transactions that would overdraw an account.

"Banks do not record charges and purchases on ATM or debit cards in the order they actually occur," stated Mr. Sobol. "Instead, banks reorder the charges and purchases so that the largest charge or purchase is the first one paid by the bank. This manipulative practice is intentionally designed, the complaints allege, to maximize overdraft fee revenue."

Further Information for Bank Customers

Bank customers assessed multiple overdraft fees who wish to learn more about this litigation should visit www.bank-overdraft.com where they can submit their complaint to plaintiffs' counsel.

Alters, Boldt, et al.
Robert C. Gilbert, 305-571-8550
or
Lieff Cabraser Heimann & Bernstein, LLP
Michael W. Sobol, 415-956-1000