First Merchants Accused of Overdraft Fee Violations

May 29, 2013
Indianapolis Business Journal  
overdraft news

Indiana-based First Merchants Bank is being accused of reordering customers’ checking account transactions to drain accounts faster and make checks bounce more frequently, triggering millions of dollars in overdraft fees. A lawsuit, originally filed last month in Delaware County Circuit Court and seeking class-action status, was transferred May 23 to U.S. District Court for the Southern District of Indiana. It seeks unspecified damages for thousands of the bank's customers. Allegedly, First Merchants used sophisticated software to reorder electronic debit transactions from highest-to-lowest dollar amount and processed debits before credits in order to deplete customers' available funds faster. Customers were charged $35 for each overdraft. Banks have been the subject of greater scrutiny related to overdraft fees and the order in which they process customers' transactions. Wells Fargo has already been ordered to pay $203 million to settle accusations of excessive fees; and in a separate case, Bank of America and JPMorgan Chase paid to settle similar litigation. In February, Squitieri & Fearon LLP won a $3 million settlement with First National Bank of Pennsylvania over allegations of deposit account data manipulation.
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