Written by: Sam Orlando
Federal Class Action Lawsuit Alleges Bank Charged Fees Not Owed
ROANOKE, VIRGINIA - In a significant legal challenge that underscores the ongoing scrutiny of banking practices in the United States, The First Bank and Trust Company (First B&T), headquartered in Abingdon, Virginia, is facing a class action lawsuit. Filed in the Western District of Virginia, the lawsuit accuses the bank of systematically charging overdraft fees on transactions that did not overdraw customer accounts, in direct contradiction to its contractual promises.
The plaintiff, Marty Alexander, on behalf of himself and others similarly situated, asserts that First B&T's policy and practice of imposing overdraft fees—despite transactions being authorized on accounts with sufficient funds—constitutes a breach of contract and an exploitation of consumers, particularly impacting those in lower socio-economic brackets.
Overdraft Fees are Big Money, According to Complaint
This case throws a spotlight on the lucrative nature of overdraft fees for financial institutions—a revenue stream that, according to the lawsuit, amounted to $31.9 billion in 2013 alone. Regulatory attempts to curb such practices, including the requirement for bank customers to opt into overdraft protection for ATM and debit card transactions, have been instituted to protect consumers. Nonetheless, the lawsuit suggests these measures have not fully stemmed the tide of what the plaintiff describes as deceptive and abusive fee assessments.
It's a Question of Timing
In a narrative that underscores the complexities of digital banking transactions, the lawsuit details how First B&T allegedly manipulates the timing of debit card transactions and account balances to justify overdraft charges. These charges are levied even when funds were previously set aside to cover the transactions, leading to multiple fees being imposed on what are termed "Authorize Positive, Purportedly Settle Negative Transactions" (APPSN).
CFPB Investigating Similar Practices
Citing investigations by the Consumer Financial Protection Bureau (CFPB) into similar practices by other banks, the complaint argues that such strategies are not only confusing to customers but are fundamentally unfair, deceptive, and designed to maximize fee revenue at the expense of consumer understanding and consent.
Class Action Seeks Restitution, Disgorgement, and Punitive Damages
The class action seeks restitution, disgorgement of ill-gotten gains, and punitive damages for affected customers, alongside demands for a jury trial. This legal challenge is reflective of broader concerns in the banking industry over fee transparency and the ethical implications of profit-driven policies on consumer finances.
As the case progresses, it promises to shine a light on the practices of overdraft fee assessments and potentially prompt further scrutiny and regulation of banking fees, safeguarding consumers against hidden charges and ensuring greater transparency and fairness in the financial industry.
Breaking Through News reached out to First B&T for comments, but they did not respond ot our requests as of press time. For updates on this developing story, stay tuned.
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