In Our Opinion:

April 6, 2010  |  Class Actions

How Did Customers Tell Banks They Don’t Want Overdraft Fees?

Through Trial Attorneys.

As we deal with defective products from China, sudden accelerating automobiles, corporate malfeasance and self interest by banks and investment houses, individuals find themselves with no choice but to seek redress in our court system. Trial attorneys can and have made consumers’ voices heard and effectuated change.

That is exactly what happened this spring when Bank of America announced that it would no longer authorize debit card transactions when the customer doesn’t have the money in their account to cover the purchase—a practice that has reaped banks literally millions of dollars in income. The national bank says that its customers have been clear that they don’t want to be surprised by overdraft fees in such cases. But how did Bank of America know that its customers were tired of overdraft fees and weren’t going to accept them anymore?

Trial attorneys.

Individual bank customers simply don’t have the power to make a national bank change its policy. Sure, if a customer doesn’t like a bank’s policies she can “vote with her feet” and take her business elsewhere, but that’s easier said than done. Switching banks can be time consuming and a terrible hassle. And even if the customer manages to extricate herself from the old bank, she is likely to find the same sort of overdraft and other banking fees at every bank she walks into because these fees have become so widespread in the banking industry.

What about collective bargaining? How can customers get together to negotiate with the bank more forcefully? There are no unions for bank customers.

How about government regulation? While banks are subject to federal regulations, and such regulations are extremely important, the recent recession is an all too painful reminder that they are not always adequate or enforced.

But there is a way for consumers who are wronged by corporate interests to level the playing field, stand up for themselves, and demand change. Through class action lawsuits, the law provides ways for them to speak with one voice—the voice of the trial attorney.

Trial attorneys sometimes represent one terribly injured person again the product manufacturer who is responsible for his injuries. Or the attorney may represent thousands of people affected by the same issue or misconduct through a class action suit. For example, if a bank charges it customers an extra $5 fee without justification, no singular customer has the time or resources to demand change and the company can rake in millions without scrutiny. But when all wronged consumers speak as one, they can have a powerful impact. Trial attorneys make consumers’ voices heard and help effect change through our civil justice system.  Unfortunately, these achievements by trial lawyers are sometimes overlooked. Yet they are a powerful tool to effect change in our democracy.

The bank overdraft litigation shows how important and effective these lawsuits can be. The banking industry discovered a few years ago that it could make a lot of money by providing a “service” to their customers: cover transactions that would overdraft the account and charge a hefty sum every time the customer “used” the service—often inadvertently. Then they manipulated the posting order of transactions to maximize the amount customers have to pay in overdraft fees. Trial attorneys filed lawsuits, arguing that the banks were operating in bad faith.

The same week Bank of America announced it would no longer authorize uncovered overdrafts—and therefore no longer charge these overdraft fees—the federal judge overseeing the litigation denied the banks’ attempts to dismiss the case. The judge said that the lawsuits were not trying to stop the banks from engaging in their business—customers just want the banks to deal with them in good faith. And trial attorneys continue to fight for a fair deal for these customers.

You can’t make big companies play fair on your own, and the government can’t handle it all. If you look closely, you just may find that you owe some of your freedoms and rights to a trial attorney.

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