New York Plaintiffs’ Firm Sues Illinois Banks For Overdraft Fees & Transaction Reordering

Consumer Account Agreements, Rules and Regulations Covering ATM and Debit Cards Require Attention as a Result of New Class Action Filings Against Banks in Illinois.

Banks should review all consumer account agreements and applicable rules and regulations pertaining to ATM and debit cards to ensure that disclosures permit the posting of transactions in any order. Banks should further review their practices with respect to the posting of transactions to determine whether they are in fact posting to maximize overdraft fees.


Illinois Banks Have Been Targeted
Illinois banks have become the focus of at least one New York law firm that is suing banks across the country as a result of the order in which they allegedly post their customers’ electronic transactions (see website here). Although Illinois courts have held that utilizing a posting method for overdrawn checks that results in more overdraft fees does not violate Illinois law (because such postings are authorized by Illinois law), no Illinois court has addressed whether a bank may lawfully reorder electronic transactions for such purpose. Section 4-303(b) of the Uniform Commercial Code permits banks to pay checks “in any order.” Section 4-303(b), however, has not been interpreted to apply to electronic transactions, and some authority exists that suggests Section 4-303(b) is inapplicable to electronic transactions. more...