FARGO, N.D. (AP) -- A legal challenge to overdraft fees charged by Gate City Bank makes the Fargo, N.D. bank a member of a growing and unhappy club whose members have been sued over allegedly abusive charges.
Bank of America Corp., Wells Fargo & Co. and JPMorgan Chase & Co. have recently settled lawsuits over their bounced-check fees, with Bank of America alone agreeing to pay $410 million, court documents say.
Several additional federal overdraft-fee lawsuits have been consolidated in federal court in Florida, where they are being handled by U.S. District Judge James L. King.
The federal Consumer Financial Protection Bureau has also begun an investigation into bank overdraft-fee practices, said its director, Richard Cordray.
The lawsuits generally allege that banks, when they process ATM and debit card transactions, reorder the entries to process the largest ones first.
This can put customers' accounts into the red more quickly than they would if the transactions were processed in the order they happened, the lawsuits allege. As a result, the lawsuits contend, banks can then collect overdraft fees on a succession of smaller charges.
Steve Swiontek, Gate City's president and chief executive officer, said his bank does not do that type of transaction sequencing, as alleged in a federal lawsuit filed earlier this month by Amber Pieloor, of Underwood.
Pieloor's attorneys want to expand her lawsuit into a class action to cover all Gate City customers that the lawyers believe were treated similarly.
Gate City has $1.2 billion in assets and 32 locations in Minnesota and North Dakota. It has its headquarters in Fargo.