Consumers won class action status Tuesday in their lawsuit against the San Francisco-based Union Bank regarding wrongfully charged overdraft fees.
The case is part of a multi-district litigation that involves approximately 30 banks, including Bank of America, Chase and U.S. Bank, which will be held before U.S. District Judge Lawrence King in the Southern District of Florida, according to the Washington Post.
Consumers involved in the case against Union Bank allege that the bank processed debit card transactions from largest to smallest instead of the time the purchases were made in order to increase the risk that customers would overdraw their checking account and rake up fees.
Union Bank estimates that reordering transactions in such a way would generate $18 million in fees annually, according to the Washington Post.
Bank of America recently agreed to settle its suit for $410 million, while King has not yet decided the status of the cases against Chase and U.S. Bank.
Bruce Rogow, one of the plaintiffs' lead attorneys on the case, said Tuesday’s action sets the stage for similar decisions, according to the Washington Post.
“All the banks will fall, ultimately,” Rogow said, according to the Washington Post. “The class certification order is a precedent that will apply to all of the other banks because they all engaged in the same practice.”
Rogow said that Well Fargo had to return $203 million to consumers when they lost a separate class action suit.
Last year, the Federal Reserve prohibited banks from allowing customers to overdraw their accounts and get hit with a fee unless customers agreed to the service.
Most banks have either dropped the practice or have discontinued overdraft programs altogether, according to the Washington Post.
Currently, overdrafts revenues are at their lowest level since 2006.