SALT LAKE CITY (AP) — Customers who say Zions Bank makes it difficult — if not impossible — to avoid overdraft fees from debit card transactions have filed a lawsuit against the bank in a Utah federal court.
The lawsuit, which seeks class-action status, was filed this week by three law firms on behalf of Melinda Barlow, of Sandy and other customers who were charged overdraft fees under policies that were in place between 2005 and 2010.
Court papers say the bank’s policies allowed it to manipulate and alter the order in which debit transactions were posted in order to maximize the number of overdrafts, increasing the fees collected from customers.
The lawsuit also contends the bank does not routinely decline debit transactions when it’s clear that doing so will overdraft a customer’s account, which also results in additional charges to consumers.
For Barlow, a Zions customer since 1990, the practices resulted in about $100 in overdraft charges on a single day in 2009, the lawsuit states.
Another contention of the lawsuit: Zions doesn’t routinely post deposits ahead of debit transactions, which could prevent accounts from becoming overdrawn.
“As a result of those acts and practices, Zions Bank’s customers have been charged excessive overdraft fees,” the lawsuit states. “Zions Bank’s collections of those excessive fees is patently unconscionable and unfair.”
The lawsuit’s allegations are specific to Zions roughly 130 bank branches in Utah and Idaho. Parent company Zions Bancorp also operates financial institutions in Arizona, California, Colorado, Nevada, New Mexico, Oregon, Texas, and Washington.
Zions Executive Vice President Rob Brough said the company can’t comment on the details of pending litigation. However, Brough said he believed this was the first litigation brought against Zions related to the issue of overdraft fees or policies.
But it adds to a long list of such lawsuits against other banks nationwide.
In August, a federal judge in California ordered Wells Fargo & Co. to change what he called “unfair and deceptive business practices” that led customers to pay multiple overdraft fees, and to pay $203 million back to customers.
A month earlier, a federal judge in Florida said customers from San Francisco-based Union Bank can team up as a class to sue over its overdraft fee policy. That case is one of about 35 from around the country consolidated in Florida involving banks like JPMorgan Chase & Co. and big regional players like Regions Bank, U.S. Bancorp and BB&T Corp.
The Utah lawsuit seeks a recovery of fees and other restitution payments for losses customers have suffered “as the result of Zions Bank’s unlawful and unconscionable overdraft fee practices and policies.” It also asks a federal judge to bar Zions from continuing the policies.
U.S. banks pulled in overdraft revenue of about $37 billion a year before federal regulations kicked in last year, requiring that customers agree to use overdraft programs and limiting the number of fees that can be charged.