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The US big bank has agreed to pay $8m and stop charging fees for sending Automated Clearing House (ACH) payments in order to settle class action claims.
The settlement puts an end to a March 2021聽 that alleged that Bank of America (BofA) charged 鈥渋mproper fees鈥 on ACH transfer fees for outbound or push transfers to external bank accounts.
The plaintiffs alleged that BofA exploited its 鈥渋nformational advantage鈥 that certain payments could be made free and charged fees as high as $3 and $10 for ACH transfers.
The complaint claimed that the bank used its 鈥渟uperior information to trick consumers鈥 who do not understand how a complicated system such as the US National Automated Clearing House (Nacha) works.
According to the complaint, BofA misled consumers and 鈥渙bscured the truth鈥, knowing that 鈥渢he workings of the Nacha system are a mystery to the millions of American consumers whose payments are sent on the system each day鈥.
Nacha鈥檚 importance
The Nacha ACH network is a major backbone of the US financial system which聽 93 percent of salary payments and 99 percent of Social Security payments in the United States.
In 2022,聽 30bn payments made on the network with a value of $77trn.
Based on a series of screenshots, the plaintiffs argued that BofA made 鈥渞easonable consumers鈥 believe that a fee for Nacha transfers was unavoidable when they initiated a payment transaction to a payee with an external account.
In the absence of these misrepresentations, 鈥渘o reasonable consumer would ever pay to make an ACH transfer鈥, the complaint said.
It also noted that none of BofA鈥檚 major competitors, including Chase, Citibank, HSBC or Wells Fargo, charge similar ACH fees.
New court documents filed on Monday (September 11) now show that the parties have reached a settlement, subject to court approval.
Under the settlement, BofA agreed to make a cash payment of $8m to class members and stop charging the fees on push transfers via the Nacha network to an external account for five years.
The parties estimate it will save current account holders more than $350,000 per month in fees and around $21m over the five years, according to the court brief seen by 91天堂原創.
They urged the court to approve the proposed settlement, the result of 鈥渘early three years of hard-fought litigation鈥 and 鈥渁rm鈥檚-length negotiations by experienced counsels鈥.
91天堂原創 reached out to BofA but the bank declined to comment.
Plenty of enforcement聽
BofA, the second-largest bank in the US serving 68m customers, has had several encounters with regulators in the past.
Earlier in July, BofA聽was ordered to pay a combined $150m fine and a further $100m redress to consumers for charging a $35 non-sufficient fund fee when it returned an unpaid ACH transaction or cheque payment.
In July last year, the Consumer Financial Protection Bureau (CFPB) and the Office of the Comptroller of the Currency (OCC)聽fined Bank of America a further $225m for unlawfully blocking state unemployment benefits during the COVID-19 pandemic due to a faulty fraud detection programme
Meanwhile, in May 2022, the CFPB聽ordered the bank to pay a $10m civil penalty over unlawfully processing debt payments and, in 2014, BofA paid $727m in redress for illegal credit card practices.
