Broken Promise? Bank of America Accused of Misleading Customers on Overdraft Refunds

When you make a promise, you follow through with it. That’s the way it goes. And it seems a California judge agrees, after she sided with Bank of America customers who filed a class action lawsuit accusing the banking giant of violating a number of laws when it broke a promise to refund overdraft fees during the pandemic. 

U.S. District Judge Yvonne Gonzalez Rogers denied the bank’s effort to toss the suit, saying the plaintiffs had plausibly alleged Bank of America misled them on its mobile app and website, Reuters reported. The bank continued to advertise refunds for overdraft and insufficient funds feeds even after terminating the Covid relief program, the lawsuit argues. 

In her ruling, Rogers said it was "plausibly deceptive" for the bank to advertise it was still doing refunds on a "case-by-case" basis after the program had ended.

No follow through

The proposed class action lawsuit was filed by truck driver Anthony Ramirez and manufacturing worker Mynor Aldana, both California residents, and New Jersey retired widow Janet Hobson. The three argue that they were refused refunds for the $35 fees during 2020, 2021, and 2022 despite the bank advertising it would give that relief to those financially burdened during the pandemic. 

They allege in the lawsuit that Bank of America was instead unjustly enriching itself. “In 2020, [Bank of America North America] made $1.1 billion from overdraft fees alone, and in the first nine months of 2021, made $823 million solely from overdraft fees,” the lawsuit states.

Judge sides with consumers

Bank of America tried to get the overdraft fees class action lawsuit dismissed, but Judge Rogers ruled that the consumers "sufficiently pleaded that defendant advertised a program when none existed."

Lawyer for the consumers, Andrea Gold, told Reuters her clients were happy with the judge’s ruling. "The bank promised COVID pandemic relief, and instead ended relief when the pandemic was still raging. Consumers deserve to get what they are promised."

Overdraft fee action

Bank fees are a common target of legal action, and recently the government has made strides in trying to protect consumers from them. In July 2023, Bank of America was ordered by the Consumer Financial Protection Bureau to pay more than $250 million “for systematically double-dipping on fees imposed on customers with insufficient funds in their account, withholding reward bonuses explicitly promised to credit card customers, and misappropriating sensitive personal information to open accounts without customer knowledge or authorization.”

The agency also took enforcement actions against Wells Fargo, Regions Bank, and Atlantic Union to return to consumers $205 million, $141 million, and $5 million in unlawful fees, CFPB reports.

The CFPB has also proposed limiting overdraft fees at large banks by reducing the standard $35 fee to as little as $3, a move that would potentially save consumers $3.5 billion a year, Reuters reported.

The Bank of America overdraft fees proposed class action is Ramirez et al v. Bank of America NA, Case No. 22-00859 in the U.S. District Court for the Northern District of California.