Compliance Corner: Litigation threats abound

Creating a sound and compliant overdraft program has always been the goal. Since the 2005 Final InterAgency Guidance was published, regulatory examiners were typically the only people who reviewed these programs. Maybe the financial institution auditor asked a few questions each year but that has now changed.

Many lawyers seem to have launched an all-out attack on financial institutions. What used to be the occasional lawsuit from an unhappy account holder has become a wave of demand letters to banks and credit unions of all sizes. What’s more, the letters even use the same boilerplate.

I represent [consumer] and a proposed class of consumers who have been unfairly and deceptively charged overdraft fees… While we have not yet commenced the litigation, we intend to do so within [timeline] in the event you are unwilling to discuss my client’s claims and a resolution of them. I have litigated dozens of cases….  [Consumer] contacted me regarding her account… Courts have ruled….[case]…[case]…[case]…  We are likely to disclose the true nature of your overdraft fee practices in litigation…

Three key areas to evaluate and review

The consumer who is named may or may not have an active account with the financial institution. Additional research may even uncover whether there is even a foundation for a claim. However, the law firms have consistently targeted a few areas, some which include:


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