July 11, 2012
PNC settles debit card lawsuit
PNC Bank has agreed to pay $90 million to settle a federal class-action lawsuit accusing the Pittsburgh-based financial institution of improperly manipulating debit card transactions to boost overdraft fees, attorneys handling the multi-bank case announced Tuesday.
The lawsuit claims that PNC and other big banks use computers to re-sequence customers' debit card purchases, posting them from highest to lowest amount rather than the actual order they come in. That system tends to drain an account more quickly and trigger the most overdraft fees.
Consumer groups have for years criticized the practice and called for regulations to stop it. The Center for Responsible Lending has likened the practice to "cooking the books" in favor of the financial institution.
PNC spokesman Fred Solomon declined comment Tuesday, saying it was the bank's practice not to discuss litigation. In the past, PNC has said it posts checks and debit card transactions from high to low because that gives priority to customers' most important bills, such as mortgage payments.
"We are extremely pleased to have achieved this result for PNC's customers who were adversely affected by this anti-consumer practice," said Robert C. Gilbert, attorney with Grossman Roth P.A. in Miami, Fla.
"We believe it will result in substantial refunds to customers," he said.
Mr. Gilbert said experts in the case will work with PNC to determine which customers were harmed by the reordering practice.
He said he expects the settlement to receive preliminary court approval later this summer and final approval "by the end of the year or very early next year."
The class-action suit, which is pending in U.S. District court in Miami, involves some 35 banks nationwide.
The lawsuit does not cover the way banks process paper checks.
So far, PNC and roughly a dozen other banks have settled, Mr. Gilbert said. They include Bank of America, whose agreement to pay $410 million received court approval last year, and Citizens Financial Group, parent of Citizens Bank of Pennsylvania, which in April agreed to pay $137.5 million.
Mr. Gilbert said "most" of the banks that have settled the litigation have stopped reordering debit card transactions from high to low and now process them in chronological order, meaning in the order they are presented.
PNC has agreed to change its policy, Mr. Gilbert said. He declined to provide details, referring further comment to PNC.
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