MIAMI - Citizens Financial Group Inc., parent of Citizens Bank, agreed to pay $137.5 million as part as a settlement in a Miami federal court case alleging the bank charged excessive overdraft fees.
A branch of the Royal Bank of Scotland Group, Citizens joins Bank of America Corp, JPMorgan Chase & Co. and several smaller banks in settling litigation over fees that are charged when customers overdraw their checking accounts.
Bank of America settled for $410 million in May 2010; JPMorgan settled for $110 million this last February. As part of the settlement, Citizens did not admit wrongdoing in the case.
Customers accused the banks of processing transactions from largest to smallest rather than in chronological order, generating unnecessary overdraft fees – in the neighborhood of $25 to $45 dollars - for millions of accounts.
The practice burdened customers with lower incomes and balances.
In 2010, the Federal Reserve stopped banks from charging overdraft fees on electronic and debit card transactions without advance customer approval.
Citizens is currently reviewing, but has not ended the practice.
The Rhode Island-based Citizens has about $130 billion of assets, and more than 1,500 branches in 12 states.
The settlement still needs approval by U.S. District Judge James Lawrence King in Miami, who has overseen overdraft cases against more than 30 lenders that were consolidated in 2009.
So far, about 12 banks across the country have settled for approximately $750 million.
Cases still in litigation include Citigroup Inc., Capital One Financial Corp., Wells Fargo & Co., U.S. Bancorp and PNC Financial Services Group.
Join PBN and two panels of successful female executives, business owners and entrepreneurs as we delve into what women should do to advance their careers, and become leaders in the corporate world and their own enterprises.
PBN's annual Book of Lists has been an essential resource for the local business community for almost 30 years. The Book of Lists features a wealth of company rankings from a variety of fields and industries, including banking, health care, real estate, law, hospitality, education, not-for-profits, technology and many more.