$2.5M Settlement Reached in First Liberty Consumer Banking Class Action Lawsuit

This is a settlement for the lawsuit.

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Scranton, NJ: First Liberty Bank & Trust, a division of Community Bank N.A., with branches in Lackawanna and Luzerne counties, has agreed to a $2.5 million settlement of consumer banking class action lawsuit.

The class action alleged that the bank manipulated the posting of debit card transactions to increase the possibility of customers going into overdraft on their accounts, thereby maximizing fees the bank could charge, and in so doing, increasing bank profits. The lawsuit specifically challenged the bank' policy relating to multiple debit card transactions posted on a single day.

According to the terms of the preliminary settlement, First Liberty Bank & Trust will pay the funds to 48,976 members of the class-action suit who were charged overdraft fees between July 20, 2006, and August 15, 2010. The settlement calls for the $2.5 million to be paid into an escrow account that will divided among the class members. The amount paid to each person will be dependent upon the number of overdraft fees they were charged and other factors. The Johnsons will also receive an additional $5,000 as lead plaintiffs in the case.

The overdraft fees class action was filed by William and April Johnson, customers at First Liberty's branch in Jermyn, in 2012. The plaintiffs claimed that First Liberty posted transactions to customers' accounts by highest to lowest dollar amounts, which increased the odds of taking the accounts into overdraft. The bank fee per overdraft is $32.

First Liberty altered its policy in May 2011, and began posting debits from lowest to highest amount, but that did not compensate customers harmed by its previous policy, the lawsuit stated.

In addition to the monetary settlement, First Liberty agreed to continue the policy of posting from lowest to highest for at least two more years, to limit the number of overdraft fees charged on any single day to four and to refrain from charging a fee unless an account has a negative balance of $5 or more. A final settlement hearing is scheduled for November 12, 2013.

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