Published on Apr 25, 2014

Overdraft fee class action suit settled. Bank blamed software for reordering transactions.

By: Michigan Lawyers Weekly Staff in Verdicts & Settlements

April 25, 2014

In a federal class-action lawsuit, defendant Citizens Bank was accused of charging overdraft fees to customers as a result of the bank’s alleged resequencing of debits made on its customer’s accounts.

Plaintiffs alleged that Citizens had employed software to automate its overdraft system. The system would reorder each transaction during a given period from highest to lowest dollar amount; this would put the highest transactions through first, thereby maximizing the number of overdrafts and the amount of overdraft fees charged per customer.

Prior to the plaintiffs’ filing a consolidated class action complaint, Citizens had changed its reordering practices to post customers’ transactions in chronological order. Plaintiffs argued that this change did not remedy the past practices that had caused increased overdraft fees to its customers.

Defendant agreed to pay $2 million to create a common fund to reimburse the overdraft fees paid on a pro-rata basis.

  • Type of action: Class action regarding overdraft fees
  • Name of case: Simpson v. Citizens Bank
  • Court/Case no./Date: U.S. District Court, Eastern District of Michigan; 2:12-CV-10267-DPH-RSW; Jan. 31, 2014
  • Name of judge: Denise Page Hood
  • Settlement amount: $2 million
  • Attorneys for plaintiff: E. Powell Miller, Ann L. Miller (Rochester); Robert Gittleman (Farmington Hills); Jeffrey M. Ostrow, Jason H. Alperstein (Fort Lauderdale, Fla.); Hassan A. Zavareeri, Jeffrey D. Kaliel (Washington, D.C.)
  • Attorneys for defendant: Dennis M. Haffey, Samantha L. Walls