A 2011 class action lawsuit that accused Akron, Ohio-based FirstMerit Bank of processing retail customer account transactions in a way that resulted in or exacerbated overdraft fees was settled for 15, $ 9 million.
The costs of this lawsuit are on Huntington National Bank, as its parent company, Huntington Bancshares Inc., acquired FirstMerit in 2016. The two banks, which are now a single entity, have 325 branches in Michigan and 110 in the Detroit metro area, after 38 in the closed state to eliminate geographic overlap.
The bank did not admit any wrongdoing in the case and argued that it was charging overdraft fees appropriately for the transactions considered in the lawsuit between March 16, 2005 and August 13, 2010, and argued that its Customer billing method had no effect on the number of fees charged to account holders.
When asked about the class action settlement, Huntington spokesperson Brent Wilder simply responded with a prepared statement: “Certain former FirstMerit clients are receiving a notice of settlement regarding a class action lawsuit related to FirstMerit’s past overdraft practices. All relevant information about the settlement is available at www.FirstMeritOverdraftSettlement.com. “
The settlement establishes an $ 8.9 million cash settlement fund and a $ 7 million debt forgiveness settlement fund. The latter fund will be used primarily to pay legal fees and costs.
Dworken & Bernstein, of Painesville, represented the complainants in Jacobs v. Huntington Bancshares Inc. and the Huntington National Bank in the Lake County Court of Common Pleas.
“We were very, very, very happy with the outcome,” said Patrick Perotti, partner of Dworken, who led the work on the class action lawsuit.
At the heart of the matter was how FirstMerit handled transactions. The complaint accused FirstMerit of engaging in a process called “reorganization,” Perotti said, which the bank denied. Replenishment refers to processing charges outside of the sequence in which they were actually made by customers. This would potentially result in layers of charges that might otherwise not be incurred.
“It was a gray area,” Perotti said. “The bank said, ‘We could do it.’ We said, ‘We don’t think so.’ “
This “reorganization” was the target of the 2009 Credit Card Liability and Disclosure Act (CARD) enacted by President Barack Obama. This law restricts the way banks can process customer transactions.
“The judge never ruled on who was right,” Perotti said. “This was settled when we don’t pretend right or wrong. But it’s probably in everyone’s best interest to resolve this matter.”
Lawsuits like this are far from rare, with some of the country’s largest banks having settled similar cases in recent years, including Citizens Bank, US Bank and Bank Of America. These cases were generally filed after 2009, when the CARD Act was passed.
More information about the case or the timeframe for customers to file a refund claim can be found at firstmeritoverdraftsettlement.com.
– Crain’s Detroit Business contributed to this report.
