BofA to Appeal Ruling on Fees

Bank of America Corp. must pay at least $284 million to customers who were charged overdraft fees on accounts containing deposits of Social Security benefits, a judge ruled Thursday.

Bank of America has said it intends to appeal the decision in which Superior Court Judge Anne Bouliane in San Francisco confirmed her tentative ruling of Dec. 8.

In addition to the $284 million, the decision calls on the bank to give each affected customer $1,000. As many as 1.3 million customers may qualify, which could increase the award to $1.6 billion, according to Mark Johnson, a lawyer for the BofA depositors.

“We’re looking at about 10 years’ worth of potential damages,” Johnson said. “The decision confirms the jury’s verdict that the bank’s conduct was wrongful and provides for an ultimate remedy for victims.”

Bank of America argued it couldn’t stop charging the overdraft fees because the accounts at issue contain both Social Security and other funds.

The order is “asking the bank to change its systems, to change its programs such that the fees won’t be charged, but there’s no way to tell what debits are allowed and which aren’t allowed,” Arne Wagner, a lawyer for Bank of America, told the judge this month.

Bank of America spokeswomen Shirley Norton and Eloise Hale did not immediately return calls seeking comment. Wagner also did not immediately return a phone call seeking comment.

The suit stems from complaints by one man, Paul Miller, who said the bank collected bounced check fees from an account into which his Social Security benefits were automatically deposited.

The bank notifies customers in writing that such fees can be automatically deducted from their accounts. Bouliane ruled that customers weren’t told the fees could be applied to their Social Security money.

Johnson said the latest order gave the Charlotte, N.C.-based bank about 70 days to appeal the decision. Bank of America collects between $3 million and $4 million each month in bounced check fees from the accounts of California customers who have their monthly Social Security benefits electronically deposited, he said.

Bank of America has filed court papers seeking to decertify the class of 1.3 million customers, Johnson said. Suing as a class is less costly for the individual plaintiffs and gives them more leverage to negotiate a settlement.

Shares of BofA rose 10 cents to $46.96 on the New York Stock Exchange.