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SunTrust, M&T Customers Win Court Ruling on Overdraft Fees
Bloomberg News
September 3, 2011
Customers of SunTrust Banks Inc. (STI), M&T Bank Corp. (MTB) and two other banks can use the federal courts rather than arbitration to pursue claims they were gouged on overdraft fees, a judge ruled. U.S. District Judge James Lawrence King in Miami said customers with debit cards attached to checking accounts aren't compelled to use arbitration rather than class-action lawsuits, as the banks argued. A U.S. Supreme Court decision in April on arbitration agreements for AT&T Inc. wireless customers must be applied case by case, the judge said.
Arbitration agreements for SunTrust, M&T, Regions Financial Corp. (RF) and Branch Banking & Trust Co. are "unconscionable" and can't be enforced, King said in an opinion made public today. He said the Supreme Court ruling in AT&T Mobility LLC v. Concepcion didn't require arbitration in every case.
The litigation before King involves customers at more than 30 banks that were sued over their overdraft-fee policies. The customers said the banks reorder debit-card transactions in their computers to maximize overdraft fees. They say such fees are processed from highest dollar amount to lowest, rather than in chronological order of purchases.
"The court's order represents a tremendous victory for consumers in litigation of national significance and at a time when the ability of consumers to stop corporate misconduct has been placed in question by the Concepcion decision," plaintiffs' attorney Michael Sobol of Lieff Cabraser Hiemann & Bernstein LLP said in a statement.
