South State Bank Multiple NSF/OD Fees Class Action

A number of class actions have recently brought suit against banks and credit unions regarding the charging of multiple nonsufficient funds (NSF) fees or an NSF fee plus an overdraft (OD) fees on a single item. The complaint for this one brings suit for these kinds of multiple charges against South State Bank.

The class for this action is all US residents who have or had accounts with South State who incurred more than one NSF fee, or an NSF followed by an OD fee, for the same item, between May 20, 2017 and the date of certification of the class in this case.

OD fees are often now significant to the profits of banks. According to the complaint, “In 2019, [South State] reported collecting $30,942,000 in consumer overdraft-related service charges on accounts intended primarily for individuals with personal, household or family use.”

Transactions are now smaller on average than they used to be, because so many people use debit cards instead of cash, and the complaint claims that the average overdraft “is substantially lower and provides much less risk and exposure to the bank if it causes an overdraft,” yet “the average cost of overdraft and NSF fees per transaction has gone up” at a rate that outpaces inflation.

In fact, the complaint alleges that “the $36 overdraft/NSF fee bears no relation to the bank’s minute risk of loss or cost for administering [its] overdraft and NSF services.” For this reason, the complaint claims, “the overdraft and NSF fee is a punitive fee rather than a service fee…”

Banks use various “balances” for accounts for their calculations, but the complaint contends that there is only one “real,” official balance—the one reported on statements and used to figure the interest on deposits and the minimum balance when that figure is a requirement. Because banks sometimes use a different, artificial balance figure, the complaint claims that “10-20% of overdraft and NSF fees are assessed on transactions where sufficient money was in the account and thus it should not have been considered overdrawn.”

In particular, the complaint says, South State should not be charging multiple fees on a single item, simply because a merchant has presented the same transaction for payment again. The rejection of the item is automated, the complaint says, and therefore presents no risk or cost to the bank. The complaint alleges that South State’s own account documents do not permit the charging of more than one NSF on a single item, nor do they permit the charging of an NSF and an OD fee on the same item.

Furthermore, the complaint claims that the Federal Reserve Board’s Regulation E requires that banks obtain an affirmative opt-in from an account holders before it can charge that person OD fees on non-recurring items.

Article Type: Lawsuit
Topic: Consumer

Most Recent Case Event

South State Bank Multiple NSF/OD Fees Complaint

May 20, 2020

A number of class actions have recently brought suit against banks and credit unions regarding the charging of multiple nonsufficient funds (NSF) fees or an NSF fee plus an overdraft (OD) fees on a single item. The complaint for this one brings suit for these kinds of multiple charges against South State Bank.

South State Bank Multiple NSF/OD Fees Complaint

Case Event History

South State Bank Multiple NSF/OD Fees Complaint

May 20, 2020

A number of class actions have recently brought suit against banks and credit unions regarding the charging of multiple nonsufficient funds (NSF) fees or an NSF fee plus an overdraft (OD) fees on a single item. The complaint for this one brings suit for these kinds of multiple charges against South State Bank.

South State Bank Multiple NSF/OD Fees Complaint
Tags: Additional charges in breach of contract, Overdraft Fees, Your Bank