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On what must be the happiest day in her 22 years, Molly Katchpole, a Washington, D.C. nanny who started an online petition urging Bank of America to drop its new debit fee, scored a big win for herself – and for consumers everywhere – when Bank of America announced plans to scrap its $5 monthly fee for debit card purchases.
The consumer outcry, spawned by Katchpole, had already prompted other major banks, including JPMorgan Chase & Co. and Wells Fargo & Co., to cancel tests of similar debit card fees. But Bank of America hung on, hoping that somehow the outcry would stop and they could go back to doing business as usual (read: business on their own terms, without considering the consumer).
They were wrong.
In this latest instance, involving the $5 per month fee, Bank of America succumbed to the pressure of fed-up folks who felt their new money-making angle was one charge too many.
“For a lot of consumers, this was the last straw,” said Jean Ann Fox, director of financial services for the Washington- based Consumer Federation of America. “Banks have been making a lot of changes to accounts, adding fees and raising the minimum balance needed, and consumers were clear that they objected to one more fee.”
But at other times consumers need more than social media and online petitions to create change. Sometimes they need the power of our legal system through class actions.
In fact, just last year, Bank of America’s strategy to maximize overdraft charges by re-ordering debit transactions was felled by a consumer class action against a number of financial institutions. The result was a $410 million settlement with Bank of America, the largest of the financial institutions involved. The lawsuit accused the banks of manipulating the timing of debit card transactions to increase overdraft fees, sometimes resulting in hundreds of dollars of fees for tens of dollars of actual transactions. Besides the monetary recovery, the lawsuit forced banks across the country to change their overdraft policies. Now they no longer offer “courtesy” overdraft protection or “re-ordering debits.”
Baron and Budd was honored to be involved with the overdraft fee consumer class action and is honored to applaud today the work of Molly Katchpole, the consumer advocate who thought she could – and did.