When most customers make multiple purchases using their debit card, they expect that these transactions will be processed in the order in which they were made. A customer with $100 in their checking account who made a $10 purchase in the morning, a $20 purchase in the afternoon, and a $100 purchase in the evening would expect to only incur one overdraft fee, on the final $100 purchase.
However, customers at several banks ended up surprised by multiple overdraft fees. These banks reordered customers’ transactions from highest to lowest, allowing them to charge overdraft fees on customers who had enough money in their account at the time of the transaction. Some banks even reordered transactions made across multiple days. Banks used a variety of strategies to hide their practice of reordering transactions from customers, including listing transactions in chronological order on customers’ account statements, burying the explanation of reordering in 40+ page small-text account agreements, and never telling customers how long they would need to wait between transactions to avoid reordering.
Between 2009 and 2020, Tycko & Zavareei LLP pursued cases against over a dozen banks for reordering customers’ transactions to increase their revenue from overdraft fees. Tycko & Zavareei argued that transaction reordering was deceptive, illegal, and unfair. Because banks hid reordering from customers, they never actually told customers how the bank calculated overdraft fees and how customers could avoid them. Transaction reordering disproportionately harmed low-income customers, who tended to keep smaller account balances, and, at $26-$36 per overdraft, fees could quickly overwhelm customers.
Tycko & Zavareei negotiated more than 15 settlements (listed below), ranging from $2 million to $137.5 million. Not only did Tycko & Zavareei win cash payments for customers who were charged unfair fees, but this wave of lawsuits also spurred changed practices at some banks, moving away from high-to-low transaction reordering. Tycko & Zavareei took on a widespread practice to promote transparency in banking, hold financial institutions accountable, and help consumers win against predatory fees.
Tycko & Zavareei Transaction Reordering Settlements:
- Duval v. Citizens Financial Group, Inc. et al., No. 1:10-CV-21080, S.D. Fla.; $137,500,000
- Austin v. TD Bank, N.A., No. 15-cv-00088, D. Conn.; $70,000,000
- Mosser v. TD Bank, N.A., No. 10-cv-21386-JLK, S.D. Fla.; $62,000,000
- Case v. Bank of Oklahoma, NA., No. 1:1 1-cv-20815-JLK, S.D. Fla.; $19,000,000
- Trombley v. National City Bank, No. 1:10-CV-00232, D.D.C.; $12,000,000
- Schulte, et al. v. Fifth Third Bank, No. 1:09-CV-06655, N.D. Ill.; $9,500,000
- Taulava, et al. v. Bank of Hawaii, No. 11-1-0337-02, Circuit Court of 1st Circuit, Hawai’i; $9,000,000
- Jacobs, et al. v. Huntington National Bank (formerly FirstMerit Bank), No. 11cv000090, Court of Common Pleas, Lake County, Ohio; $8,975,000 in cash, $7,000,000 in debt relief
- Casto v. City National Bank, N.A., No. 10-C-1089, Circuit Court of Kanawha County, West Virginia; $5,500,000
- Jones et al. v. United Bank and United Bankshares, Inc., No. 11-C-50, Circuit Court, Jackson County, West Virginia; $3,300,000
- Hawthorne, et al. v. Umpqua Bank, No. 3:11-cv-06700-JST, N.D. Cal.; $2,900,000
- Mathena v. Webster Bank, No. 3:10-cv-01448-SRU, D. Conn.; $2,800,000
- Molina v. Intrust Bank, No. 10-CV-3686, Eighteenth Judicial District, District Court, Sedgwick County, Kansas; $2,759,641
- Simpson et al. v. Citizens Bank et al., No. 2:12-cv-10267, E.D. Mich.; $2,000,000
- Several confidential settlements totaling over $20,000,000