Webster Bank To Pay $2.8M To Settle Overdraft Fees Lawsuit

09/30/10

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Waterbury, Conn.-based Webster Bank, which has a presence in the Bay State, has agreed to pay $2.8 million to settle a class-action lawsuit alleging it improperly assessed and collected overdraft fees from checking account customers.
In the lawsuit, the bank is charged with manipulating customers' checking account debits, according to reports. This alleged action would have allowed the bank to maximize the number of overdraft fees it could charge.
Webster Bank is said to have accomplished this by posting checks and ATM withdrawals out of the order they are received. The bank allegedly posted the largest withdrawals first in order to drain the account balance, according to reports.
Webster Bank said it "continues to believe its practices were both proper and lawful," according to a written statement. The bank opted to pay the $2.8 million settlement to "fully and finally to resolve the litigation and avoid any further expense and distraction occasioned" by the lawsuit.
The settlement is subject to approval by the U.S. District Court for the District of Connecticut and would also resolve a similar class-action lawsuit pending against the bank in New York, Webster said.