Earlier this year, Balch & Bingham reported on the dismissal of one of the first class actions challenging financial institutions for charging multiple “overdraft” or not sufficient funds (“NSF”) fees for the same transaction or “item.” In these cases, Plaintiffs allege financial institutions may only charge an overdraft fee once for each “item” – be it a debit, check, draft, withdrawal, ACH payment request, etc. – no matter how many times merchants represent the transaction or item to the bank for payment. Last week, the Tennessee Court of Appeals became the first appellate court to affirm the dismissal of one of these cases.
Continue Reading Tennessee Court of Appeals Becomes First Appellate Court to Affirm Dismissal of Class Action Challenging Multiple “Overdraft” or NSF Fees for Same Transaction or “Item.”

The federal courts have been struggling for several years to clarify Article III standing law. Is it enough that a plaintiff satisfy the elements of a federal consumer protection statute? Is it enough that a data breach have happened? Or, must the plaintiff show that they have actually been damaged or that there is a substantial risk that they will be damaged? On October 28, 2020 the Eleventh Circuit handed down a sharply split en banc decision applying the U.S. Supreme Court’s Article III standing decision, Spokeo Inc. v. Robins, 136 S. Ct. 1540 (2016). The court held directly held that it is not enough that a statutory violation have occurred. Even though defendant Godiva Chocolates violated the Fair and Accurate Credit Transactions Act (“FACTA”), the Court held that the named class plaintiff lacked standing to bring the action because he did not allege any concrete injury.

Continue Reading Giving Teeth to Article III Standing Requirements in the Eleventh Circuit.

Earlier this year, Balch & Bingham reported on the wave of “Agent Fee” class actions against lenders who made PPP loans under the CARES Act. At one point, there were over sixty such lawsuits, spread across the federal courts, alleging that banks were required to pay CPAs and others who assisted borrowers with loan applications.  Since then, however, virtually every ruling has been in favor of the banks, and now there is real reason to question whether these suits will continue.

Continue Reading RETREAT! “Agent Fee” Class Actions Moving Against Plaintiffs

In a landmark decision Monday, the United States District Court for the Northern District of Florida dismissed a putative class action involving “agent fees” for Paycheck Protection Program (“PPP”) loans under the federal Coronavirus Aid, Relief, and Economic Security (“CARES”) Act. This lawsuit, Sport & Wheat CPA, PA v. Servisfirst Bank et al., No. 3:20-cv-05425-TKW-HTC (N.D. Fla.) claimed to represent a class of accounting firms and other consultants that allegedly worked as agents on behalf of applicants for PPP loans – typically small business clients. Plaintiff contended the CARES Act and implementing regulations required lenders to pay them “agent fees” for preparing loan applications.

Continue Reading Florida Judge Dismisses First-Filed PPP Agent Fee Class Action, Holds the CARES Act Contains No Requirement Agents be Paid

At least two class actions filed in the wake of the COVID-19 pandemic by disgruntled accounting firms allege some of the nation’s largest banks never paid “agent fees” to entities assisting small businesses apply for Paycheck Protection Program (“PPP”) loans under the federal Coronavirus Aid, Relief, and Economic Security (“CARES”) Act – and never intended to.

These lawsuits allege plaintiffs represent a class of financial services and accounting firms that prepared PPP applications on behalf of eligible small business clients. Plaintiffs contend the CARES Act and implementing regulations require lenders to pay them “agent fees” for preparing loan applications. Fees are calculated by tiers according to the amount of the loan – a one percent fee for loans of $350,000 or less, a .50 percent fee for loans of more than $350,000 and up to $2 million, and a .25 percent fee on loans over $2 million.


Continue Reading Second Wave of CARES Act Litigation Filed Against Banks; Accounting Firms Seek “Agent Fees” for Preparing PPP Loan Applications.

In a flurry of new class actions filed on behalf of unhappy small business owners, banks are facing suits alleging they unlawfully prioritized processing large loans under the Paycheck Protection Program (PPP) over smaller ones. Two parallel class actions were filed on April 19, 2020 and April 20, 2020 in California federal court accusing two large banks of reshuffling loan applications instead of processing them on a first-come, first-served basis to purportedly maximize the banks’ profit from the federal loan program. Another similar class action was filed in state court in Texas. The class plaintiffs include a frozen yogurt shop, an auto body shop and a flooring company among others.

Continue Reading Banks Beware: New Class Actions Alleging Banks Prioritized Large PPP Loans Over Smaller Ones

As we have noted in other postings, plaintiffs continue to bring actions regarding bank fees charged for Overdraft or Not Sufficient Funds (“NSF”) fees. While these claims originally challenged posting order, they are now more creative.  For instance, the “Authorize Positive Settle Negative” claims noted in an earlier post.  One of the newest theories is that a financial institution should charge an NSF fee only once, no matter how many times that transaction or item is processed.

Continue Reading Class Action Alleging Multiple NSF fees for the Same ACH “Item”

Over the last decade, financial institutions have seen an avalanche of claims regarding overdraft fees, especially in connection with debit card transactions. These claims are almost always brought as class actions.  The early cases concerned the practice of posting “high to low” during nightly processing, allegedly for the purposes of generating more overdraft fees.  The lead case was Gutierrez v. Wells Fargo, 704 F.3d 712 (9th Cir. 2012).  Eventually, an MDL was created in the Southern District of Florida against a large number of banks, leading to a number of settlements.  At about the same time, the Federal Reserve altered Regulation E, requiring deposit institutions to obtain express consent to charge overdraft fees on “everyday” debit card transactions, and providing far greater understanding by consumers of overdraft fees on electronic transactions.

Continue Reading “Authorize Positive, Settle Negative” Overdraft Fee Action Allowed to Move Forward

Last month, the Eleventh Circuit affirmed the dismissal of a putative class action suit alleging violations of the Fair Credit Reporting Act thereby delivering an important victory to lenders and other entities that provide consumer information to credit reporting agencies. Under the FCRA, “furnishers” of consumer information are prohibited from providing inaccurate information to credit reporting agencies (“CRAs”) and must investigate when a consumer disputes such information.  In Hunt v. JP Morgan Chase Bank, Nat’l Ass’n, Case No. 18-11306, 2019 WL 1873419 (11th Cir. Apr. 25, 2019) (unpublished), a united panel held (in an unpublished opinion) that JP Morgan Chase had not violated its duties as a furnisher under the FCRA when it reported that a customer’s account was past due.  Not only was such information accurate when it was provided, but the bank was never even required to investigate its accuracy because the plaintiff’s complaint did not allege that JP Morgan received notice that he disputed the information with the CRAs. The Court did not decide, however, whether JP Morgan had an obligation to “refresh” information it had previously provided.

Continue Reading Eleventh Circuit affirms dismissal of attempted FCRA class action against furnisher of consumer information

Last October, we reported here how the Eleventh Circuit in Muransky v. Godiva had broken with other circuits regarding the application of the Supreme Court’s opinion in Spokeo v. Robins. Last week, the Eleventh Circuit sua sponte vacated its October 2018 opinion and issued a new opinion.

Continue Reading Eleventh Circuit sua sponte vacates prior Spokeo opinion