Toronto Dominion Bank (TD), Canada’s second-biggest lender, reached a preliminary agreement to pay $62 million to settle litigation accusing it of gouging customers on overdraft fees for checking accounts.
The settlement would resolve claims by consumer account holders who sued over fees charged to debit cards attached to their checking accounts. U.S. District Judge James Lawrence King in Miami must approve the settlement. On April 3, King certified the case as a class-action, or group, lawsuit.
“It’s a good deal for TD Bank customers because it’s going to help recover for them some portion of the overdraft fees which we contend were wrongfully assessed against them,” said Robert C. Gilbert, an attorney for plaintiffs, in a telephone interview. “Short of the litigation, they would not have had any opportunity to recover these fees.”
The litigation before King involves more than 30 banks sued over their overdraft-fee policies. The customers say the banks reorder debit-card transactions in their computers to maximize overdraft fees. Bank of America Corp. (BAC:US), the second-biggest U.S. bank by assets, agreed last year to pay $410 million, without admitting liability, to settle an overdraft lawsuit.
“We think it’s in our best interests to put this behind us,” said TD Bank spokeswoman Rebecca Acevedo in a telephone interview.
Gilbert said the agreement will cover “several hundred thousand” customers. The exact number will be determined later in the settlement approval process, he said.
On April 25, Citizens Bank reached a settlement, agreeing to pay $137.5 million. In February, JPMorgan Chase & Co. (JPM:US), the biggest U.S. bank by assets, reached an agreement for $110 million. Both are awaiting King’s approval.
The case is In re Checking Account Overdraft Litigation, 09-md-02036, U.S. District Court, Southern District of Florida (Miami).
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