Citizens Bank Settles Overdraft Fee Class Action Lawsuit

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Last updated on July 22, 2019 Comments: 41

Banks are still struggling with the decisions executives made to maximize profit from overdrafts by rearranging the order of withdrawals to customers’ detriment. By December last year, Bank of America settled a class-action lawsuit related to overdrafts and was expected to pay $410 million. That decision is being appealed by a plaintiff, so it will still be a long time before the results are determined and class members receive compensation, if any.

Earlier this year, JP Morgan Chase settled a related class action lawsuit for $110 million.

Citizens Bank is the latest bank to come to terms with the way it took advantage of customers. This bank has agreed to pay $137.5 million to settle.

For the most part, banks continue to engage in the process of reordering withdrawals processed on the same day (whether the withdrawals be through checks, electronic direct debits, or ACH transactions) to optimize the possibility of collecting multiple overdrafts. The largest withdrawal is processed first, and subsequent withdrawals are processed from largest to smallest. Banks offer a reason for this order. They claim that the largest withdrawals are often the most important, such as rent or mortgage payments, and want to ensure these payments have the strongest possibility of being processed. That explanation doesn’t hold up for customers with overdraft protection, though, because this service allows all withdrawals to be processed — for a fee.

Furthermore, banks at the time of the lawsuit often allowed for multiple overdraft fees on a single day. With a $200 bank balance and withdrawals of $20, $50 and $300 in one day, the customer could be charged three different overdraft fees of $35. This is obviously more profitable for the bank than allowing the smaller transactions to be processed ahead of the larger withdrawal. Since the media attention surrounding the lawsuit, some banks have changed their policy to allow for only one overdraft fee per day, but many banks continue this practice.

So far, the only new regulation regarding overdraft fees requires banks make the service optional. Customers can opt to have transactions declined when the funds are not available to cover the withdrawal. Banks still steer customers towards overdraft protection as they feel it is a better experience for the customer, and, of course, a significantly profitable approach for banks.

Are you a customer of Citizens Bank? Have you ever had problems with Citizens Bank’s overdraft fees and policies?

Article comments

Gail Federico says:

I have been paying over $ month for over 15 years in overdrafts. They allow you to overdraw up to 5 times at a $35 fee each transaction. Do I have any recourse now? How can I get involved in this suite.?

Gail Federico says:

Citizens bank allowed me to overdraft in the last at least 10 years knowing full well they would get several overdrafts each and every week. Does this suit apply to me. At least $3oo. + per month for 10 years.

Mr"T" says:

The new charge is $37.00 That’s 3 times on each overdraft. That’s $111.00 a month. I just got hit for a $6.99 charge that went into overdraft. I paid $111.00 for a $6.99 overdraft. I didn’t see this because they don’t tell you until the end of the month. This is legal LOANSHARKING… This has to stop.

Doctor J says:

I have been with Citizens for over 30 years. I have 2 Citizens check accounts. I had an overdraft from the smaller account in error. When notified I transferred money immediately from the larger account to cover the overdraft. But that was not sufficient. Citizen does not transfer from your other accounts to cover the overdraft, they lend the money at credit card rates to cover it at over 2% per month and don’t bother to notify you of same until your next mailed statement.
Over the years Citizens suggested I change my home equity line of credit for a new one with a higher available amount or a lower interest rate. They never registered each HELOC closure (claiming it was my responsibility although this was never the case for many equivalent situations over many years with both Citizens and with other banks) For more than 6 months Citizens failure to respond to its own branch manager, a new bank branch manager and 2 separate law firms prevented me from obtaining the HELOC registration info to allow me to get a new mortgage with another bank. I had to pay a law firm specializing in tracing HELOCs that were never registered by Citizens.
Bottom line — Citizens has changed from a great bank to the worst bank experience I have ever encountered.
Tell everyone of your experience and consider changing your account to a small local bank or local credit union that has the same FDIC protection of your deposits as the large banks but I would hope will be more responsive to customer service. I sent a formal complaint to the state and federal consumer protection agency. Citizens replied their actions were all within the law, so it was a wasted effort.
It seems current Citizens respects only profits. This is not the Citizens I have known for many years. There is only one language Citizens will understand. Vote with your feet, leave this bank and tell everyone why.

Robert Stewart says:

I have been using this service for a long time.i have not been able to figure out the bank statement but have noticed incorrect amounts on them. but I thought that the bank would find the problem and correct it. because the numbers never lie and thought that if the numbers where not rite that the bank would have to account for the executive amount of money. but looks like they have a hole they stuff that extra money

Jon Manton says:

Yeah I have a thing with the overdraft thing, citizens bank purposely overdrawn account that I told them to close when I switched Banks, they caused my thing by trying to charge me monthly fees and then return service fees and overdraft fees to the point where they negative the account $1045 and then try to take out a collection on me and they reported it to check systems trying to state that it was accurate ChexSystems refused to look into it, The fact is every time they reported the account it’s a different balance to everyone they report it to, and I reported them to the consumer financial protection bureau they stated that I hold 1045 then I called him out on the legal charges that I never authorized then they said it was 380 then 320, but yet still reporting a old balance to them for thousand $45 to check systems which is blocking me from opening a new checking account with a different bank, not to mention the fact that they stated that they charge the account off of $1045 in January 2019, for $1045 then change it to $380 and then they made the mistake of sending a letter out that I think they purposely sent to the wrong address but magically it got sent to me later on that in June 2019 hi magically got a letter from them stating that the same account was 170 something dollars, but yet after the fact that I found that they then on the same account that they reported everyone it was $1045 then $380 they then took a new collection out on me for the same account number for $1225 kind of funny how the same account has different balances all over the place and yet the town the consumer financial protection bureau that it was 380 something dollars but yet I even have a letter that I received they sent in June 2019 that said 170 something so it’s kind of funny how their balances are all over the place because they’re full of shit.

Sean Hart says:

I have never got money for citizens over Draft fees .is going to the customer who got money taken out of my account.because over the years it adds up to a couple of thousand Dollars witch is nothing to snub my nose at .I never received a nicked from citizens bank .the small guy is the one who got there money taken ia money making scam because .it made them over a billions yes B. It s insane well we’re is my couple grand I have received a dime . This is lip citizens lost a class action law suit.well I did not receive the money and as far as I noy money was taken .so who ever got the money for the case .we’re is my little peace . The small guy is all of use .I am sick of taking everything on the chin .all together we are Giant .we’re is are money?

Sean Hart says:

I would go in to cash my check for 8 hundred .I would have fees around 4hundred and .it would hurt bI try to watch my account as much as I can but back then thay were like but that are rules .I no but I am or at the time I was .I wish sitizens was settling over draft fees I would reseave a couple of grand .witch is a lot to me living on a fixed income.

Sean Hart says:

Yes I have been a customer years years and I have been charged thousands of dollars for over draft fees in the years I have been a customer I want over draft protection.

Charles Clingham says:

Citizens hides purchasers small transactions and then hits you with multiple overdrafts. This bank is pathetic they just paid out 137 million for breaking the law on overdrafts

Michelle says:

How is Citizen bank still getting away with this ? They are ridiculous with fees

Anon says:

I truly don’t know how Citizens continues to get away with it. We are a family of 6 with one income and we live paycheck to paycheck. I check our account religiously to be sure we’re ok and don’t have to transfer money (because OF COURSE they’ll charge you a fee for transferring your own money too many times). Nothing makes any amount of sense on their website or app. The charges post in one order one day and then you look again and they’re in a completely different order. Or I’ll check it at 9 pm one night and see all is well and then before business hours the next day there are more charges posted and we’re in trouble. It’s maddening. I’ve been wanting to leave for years but I don’t want to just get more of the same from a new bank.

Colin Chapman says:

These citizens bank scumbags are clearly publicly lie’ing to people, their website claims they are waiving over draft fee’s THATS A LIE!! How are they allowed to do this!??? This is the world we live in?? They can steal your money any time they want and you can’t do a dam thing about it!!!!

Jessica Dumas says:

I am glad to know I am not alone. For a moment I started questioning my own intelligence regarding my math skills and so forth. I have a pretty decent career, let alone two. I know what comes out my bank and expected dates. With both jobs it able to cover all my bills and more. However, Citizens Bank has this wonderful habit of moving things around on my statement when I pull it up on my mobile app. I started wondering if my mind was playing tricks on me or if I was having some term memory loss. The games they play with my account is ridiculous and they get over on me a lot and I am beyond sick of it. It has even been multiple occasions where transactions were made on my account without my authorization and it put me well over 4-500 in the negative. They waived about 200 dollars of those fees. But after there investigation turned out someone had used my bank card I had lost. They still deducted those fees from my next check. Citizens Bank is a scam.

James Holden says:

I had 5 overdraft $ 125.00 in 1
Months & I had 3months

Denise says:

Yes. Citizens Bank profits by reorganizing dates of transactions to maximize profits. I have incurred up to $200 within days for payments that were cleared days before….

MM says:

Yes! Been arguing and fighting with them for months! They have taken of 1300 in fees in 3 months! Someone from chairman’s office was supposed to call and never did! Calls are recorded and they admitted to mistake but taking forever to rectify

Victoria O’Hearn says:

It appears that citizens bank is doing this again ! I tried calling them or even emailing them re: my dispute about “ overdraft/ insufficient available funds”. I consistently look at my balance on line , and I saw what it was . I have a great job and get paid religiously biweekly , and have been a customer since I was 17 years old . Like many , my pay was Friday , my balance was up to date . Then on Monday morning , I got that nasty green message of an overdraft fee ! The check that the bank claimed they covered was already cashed prior to my pay day ! That’s 37 .00 ! That an hour of work for me – it may mean nothing to some , but it means something to me . That 37 .00 that was taken for me could have helped me get gas to drive 1 hour to work , AT a prison !! A prison !!
Citizens bank will not answer my calls , you have always been very kind to me in the past , but you won’t answer my calls .

Thayer David Sears says:

Let’s get another class action suit going!

Michael Miller says:

Approximately 15 to 20 years ago I was always struggling. During that time, Charter One made it a regular practice to steal money from me, sometimes charging me with insufficient funds fees of $35 four to six times per day. Of course when I asked why they couldn’t first accept the smaller debits and allow them to go through—this would have limited my fees to one or two—they told me that they figured that the larger ones were more important to me and that I would want them to go through. If this isn’t stealing I don’t know what is. I have not seen a dime in any settlement money to this day.

Kristina Sepp says:

I has charged a sustained over draft fee on the 4th day even though per Citizens Bank policy they charge if on the 5th day.

Alfreda L Muntz says:


Darren says:

SHADY BANK!!! They manipulate the date of your transactions and use their online app to deceive you. They maximize their overdraft fees by manipulating the order in which transactions go through. Criminal enterprise!

Andrea Hoole says:

Yes!!!! They do this frequently
They told me that their app is not accurate or in real time. SUCH bs. I screenshot my account transactions daily know. They still manipulate transactions to maximize overdraft fees.

Shairoon McCullough says:

Yes, I have. I signed for overdraft coverage but was never told the astronomical amounts of fees I would be charged. I was told sign here and the papers were taken right back from me. I never knew I would be charged 35.00 plus 30.00 every 3rd business day for each overdraft. On my statements it only shows 35.00 for the 1st overdraft then 30.00 every 3 days (business days). That is all I ever saw on my stayements. I just got off the phone ? with Citizens and they. Said I get charged 35.00 then 30.00 each 5th day but they lied . it happens on the 3rd day. Every 3 business days for each overdraw. I need a lawyer.

Iisha Bennett says:

Citizens is THE WORST BANK EVER! I made a cash deposit and my slip said I had a + balance for withdrawal. I was still charged a OD FEE, this is not my primary acct so I didn’t pay much attention to it. I was charged a sustained OD FEE in addition to my OD fee, despite my receipt showing my account was in a positive state. Not to mention my cash deposit that I made on Saturday did not post until Monday. They also prolong holds on checks I noticed as well. They need another law suit.

Tom says:

Anybody out there?? I’m just putting som feelers out there to see if there’s anyone interested in making a pretty substantial amount of cash in a short amount of time. Only thing this requires is that you have an active bank account or credit card in the US. No cash is required up front to start. Which means your account can be on a zero balance and that is completely fine. +1(314) 856 1730, lets talk about the next deal

Anonymous says:

I have a CD with Citizens Bank. They charged me a $50 “inactivity fee” on my CD, after sending no notices about the CD renewal. What is worse, I cannot withdraw my money for another year, unless I pay another $50. They have had the use of my money for several years while paying almost no interest, and no they hit me with a $50 fee. It took the manager about 30 seconds to “reactivate” the account. This is a bank turned robber!

Anonymous says:

I’ve had same happen to me . they reorder withdrawals. instead of one overdraft charge i ended up with four in one day, Is every customer going to be included in this settlement?

Anonymous says:

While this has nothing to do with the settlement I just received my first overdraft. We have a savings account with enough money in it to reach the amount we thought was needed to link with our checking account. I had a check from disability insurance and I procrastinated in putting it in the bank. I just did not take a lunch break when I went back to work and the check arrived. Hubby thought the check was deposited and I did not think it would matter. We bounced a check and they took the money from our saving account but then charged us a fee. What the HECK!!!!!!!

Anonymous says:

I just have found out about this settlement, and, as a Citizens Bank customer to whom this has happened more than once (most recently just a couple weeks ago when they held my husband’s paycheck an extra day, even though it showed up as deposited and available in the online ledger, causing $111 of fees), what I want to know is, how do we get some of the settlement money?? Nothing I’ve read tells about that.

Anonymous says:

Oh yes all told it was about $500.00 in the span of the first month they did this (once I was aware they couldn’t get me again – they needed the element of surprise to make it happen) And once you bounce your now just a deadbeat and they figure no one will believe you then. $500.00 is a whole weeks pay for me. Bet it added up to billions for them. But how many people had tragic life-altering circumstances occur as a result of their actions? I hope the settlement will cover that. In fact this should not settle they should be fined for what they did. Comcast is also guilty of this. Being a wise finance and somewhat cheap – I cancelled my cable – they turned it off but unbeknownst to me not at the pole – they charged me for 6 months more to the tune of almost $700.00 – I fought it every month and continually told them i wanted it off – they refused to end my service – yet I had no contract – they put the charges on my credit report – I fought it up through corporate where they decided I could pay half and still be left with the ding on my credit. This should be illegal as well – but after -all it’s up to me to prove I cancelled my cable. All these companies are operating like thieves and criminals – they are no better than organized crime.

Anonymous says:

I had the exact same experience to the letter as Kami- I did payroll for the company I worked for and knew when the checks go into the accounts (because I was the person paying them). They go in Wed at midnight – somehow though Citizens translated that as Thursday at midnight which meant Friday. They just kept repeating that I need to keep better track of my account. They also refused to prove the timing of the transactions or give me a print-out that showed them – they said it all happened at midnight at the same time…? Well then how do you determine I was overdrawn? I argued at the bank and in front of all the customers she told me I need to keep better track of my finances (I work as a bookeeper for my company also.) They never informed me of the change of terms as far as pending transactions and innaccurate balance info if you check the atm due to them or that you could now withdraw money unendingly while overdrawn. 7 years my account never worked that way and I never bounced anything. They sent me a new ATM in the mail and de-activated my old ATM it was not accompanied by new terms – nor was I given a reason – suspicious I called to ask about the terms to which I still wasn’t informed. Ultimately it affected my ability to qualify for a home loan I got hit with a higher rate – because there was this big fat overdrawn by 500 written on every statement (they never remove it once it’s there they show every month.) Which brings me to another point – If banks require original statements for loans then how can they legally be allowed to charge you for them? I had to provide a years worth of statements (they will not accept online print-outs as legal documents. Yet I am charged $3.00 a month. They also charge me $9.00 for every non citizens ATM (foreign fee, non citizen’s fee, and the other parties’ fee.) They have also quite often charged me duplicates on these. It’s one thing to make a mistake but the fact that they are deliberately screwing customers is insane – I want my money back.

Anonymous says:

OD fees are such a huge moneymaker for banks; we really have no idea. The moral of the story is to not spend more money than you have available. Even if that means writing down every purchase, service charge, ATM fee, etc. These days, people depend way too much on a quick glance of their account online and totally forget about automatic withdrawals that may not have come out yet, or monthly fees that haven’t been debited yet, and their own purchases that may not have come out of their account yet. You have to remember that the merchant decides when he’s going to debit your account for your purchase – not you, and not your bank. The bank has an obligation to process all debits at the time they come in, whether it’s the same day the purchase was made or a week later.

Having said all that, I’ve made mistakes when it comes to balancing a checkbook myself, so I’ve been there. But as despicable as the banks’ practices have become, it’s still up to us to keep track of how much we spend and how much we have left in our accounts.

Anonymous says:

Really?? I keep track of my account daily and I keep track of the automatic withdrawals. It’s still a matter of banks rearranging our transactions and changing dates so that they can collect overdrafts fees! Sorry that’s just wrong!!

Anonymous says:

Yes!!! I’m a single mom with multiple sclerosis and only recieve disibility for an income. I overdrew my account by accident thinking I had more in my account then I did. This month my disibility check was 150.00 less than normal because of a medicare payment social security took out. Normally masshealth covers that for me and but I didnt renew on time cuz Inever got the papers. Sooo thinking I had more in there than I did I went on to use my debit card like usual for coffee, gas, a lot of under $10 transactions. Had no idea until yesterday because thyey sent the notices to the wrong address even though I’ve told them on 3 occasions the correct address. I’m looking at $600 in overdraft fees come Thursday when my SSDI deposit is put in. I’m in such a panic Im not gonna be able to pay my bills
Kate G
Mansfield, MA

Anonymous says:

I was a victim of Citizens Bank, and I had called their national customer service line over and over, ledger in hand, statements in hand, and even reciepts with timestamps of my transactions, telling them that they screwed up. I was getting hundreds of dollars in overdrafts because of making one math mistake of a few cents. The response I got from the supervisor was “WELL if YOU would keep a ledger, YOU would see you’re overdrawn.” I told her I wasn’t denying that I was overdrawn, but I wasn’t overdrawn on Tuesday, i was overdrawn by a few cents on Thursday, and because they had ordered all my transactions from biggest to smallest instead of by how I actually spent them, they forced me into overdraft. She just wasn’t seeing it. Sometimes I wasn’t even off, and they’d still do it in such a way that I’d be overdrawn, it was because they actually changed the date (I saw it on the website) of when my paycheck would post to my account by anywhere from 2-4 days, whatever they could do to make it look overdrawn. By the end, they owed me thousands over the years. That last argument, I was $200 in the hole, and I just opened an account with someone else and let that citizens account go into collections. I had asked them once when I had probably $400 in the citizens account if I could just close it. They wouldn’t let me ! they said I had to have exactly a zero balance and just let it go inactive after a few months, and it would close automatically. I should have just pulled all my money out right then. I want to know how us consumers get our money back that the banks stole from us.

Anonymous says:

I am going thru the exact same thing now with Citizens bank and its all before Christmas. I can’t even get my kids their presents because the have messed up my account so bad. What should i do ?

Anonymous says:

omg.. me too.. it is aggravating to no end… they say one thing and do another… transactions that happen on friday can overdraft you on tuesday if they are using the unethical way they do business .. a 5 dollar atm withdrawal will cost you an extra 37 dollars when the input transactions they way they wish… drives me insane..

Anonymous says:

I worked in a bank and was not aware of this practice. Even if you have overdraft protection, there is usually a fee for the transfer, and the bank could use this method to make several transfers and collect several fees. Although it would not happen if a person did not overdraw, this still seems highly unethical.

Anonymous says:

More and more the banks are restructuring and offering overdraft protection for free or a small fee but people decline it. Overdraft protection is a form of insurance for people that are tapping out their account on a regular basis. Use your savings to cover an overdraft and replenish the savings when possible. Why even take the chance of getting a charge for money you have. Just because the money is in two places doesn’t mean you should not utilize them both.