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ABA: The American Bankers Association
Compliance News

ABA Issues Staff Analysis of Overdraft Demand Letters

As plaintiffs' firms continue to send demand letters regarding banks' overdraft practices, ABA issued a members-only staff analysis explaining the plaintiffs’ claims and reviewing recent agency pronouncements on overdraft. The firms have directed the letters to banks of all sizes, including community banks.

The demand letters state that the firms have assembled proposed classes of consumers who have been unfairly and deceptively charged overdraft fees. Specifically, the firms allege that sufficient funds were present in the customer's account when the bank authorized the transaction, the transaction posted when insufficient funds were available in the account, and the customer was charged an overdraft fee. In addition, the firms allege that customers were charged more than one returned item fee on a single item.

In regulatory publications, the Consumer Financial Protection Bureau and Federal banking agencies have emphasized that the bank must disclose sufficiently the circumstances under which the bank will charge the customer an overdraft fee. Contact Jonathan Thessin for more information.