BankAtlantic routinely charges a $35 overdraft fee and $7 dollars every business day thereafter when a client makes a debit card transaction with insufficient funds in his or her account. "It amounts to a loan in the thousands of percent points because you often have people who are overdrafting in the amount of a few cents or a couple of dollars and they are charged $35," says Litchner.
"If the client does it a few times they could be facing $35, $70 or $105 charge for the bank agreeing to loan you 25 or 50 dollars for a few days," Litchner adds.
Because BankAtlantic operations are limited to the state of Florida, the complaint has been filed in state court. BankAtlantic is calculated to have taken in $38 million in fees in the first six months of 2009 – about half of that is overdraft fees.
The overdraft problem is widespread. According to Lichter and others, banks are making now more money from overdraft fees than they do from their credit card businesses.
"A lot of individual plaintiffs that get stuck with overdraft fees tend to be lower income individuals," says Lichter. "It may be just a few hundred dollars, but it certainly becomes a meaningful amount for a certain group of people."
Since filing the complaint, Lichter says his firm has heard from many BankAtlantic customers with serious gripes about overdraft fees. "One of the people we talked to as a potential client had to go without a car because she paid hundreds of dollars in overdraft fees," says Lichter. "Her car sat idle while she was trying to deal with that situation."
Yet for a few hundred dollars no one person is going to court and take on a giant bank; it is just not economically feasible. That's why, Lichter says, this situation is the perfect vehicle for a class action suit.
The suit alleges the bank is in breach of contract, in breach of the duty of good faith and fair dealing, and guilty of unjust enrichment, conversion and usury and aims to recover the hefty overdraft fees charged by BankAtlantic for thousands of its customers.
David Lichter is a name partner with the firm of Higer, Lichter & Givner. Lichter is an experienced trial attorney whose work is substantially devoted to the mediation, arbitration and litigation of commercial litigation and securities arbitration matters.