Popular Community Bank has been ordered to pay over $7.4 million to some of its customers and their attorneys, after a judge in New York State Supreme Court in Manhattan approved a settlement in a class action lawsuit last week.
Judge O. Peter Sherwood ruled that a settlement between the bank and plaintiffs was “fair, reasonable, and adequate” in a case in which Puerto Rico’s biggest bank allegedly charged illegal fees to its customers for overdrawing on ATM withdrawals and point-of-sale (POS) debit card purchases between 2009 and 2014.
The bank formerly known as Banco Popular North America agreed to pay between $550,000 and $5.2 million to customers who submitted claims before July 23. “If the total amount of claims is less than $550,000, the payments will be increased on a pro rata basis until the $550,000 threshold is reached,” according to court documents.
Over 3,000 claims were received after more than 50,000 customers were notified of the deal. The clients may receive up to half of eligible initial overdraft fees paid on card transactions during the period during which the bank is alleged to have imposed those fees, which ranged between $10 and $30. In addition, customers are also eligible to receive up to half of $5 per day ‘continuous’ overdraft fees they were levied from January 2012 on.
The Court also approved about $2 million in attorneys’ fees to be distributed to customers, as well as $250,000 to the administrator who oversaw the settlement.
The case has been in litigation since November 2012 when an elderly Soundview resident with a Banco Popular account and her son filed suit. The customer, Josefina Valle, and her husband opened accounts when they moved to the Bronx from Puerto Rico in 1994, then Valle closed it when her husband died in 1999. She then opened a new one, listing her son as a beneficiary.
When Valle’s son Wilfredo found that his mother was being assessed overdraft penalties on her account, he approached branch officials to have the fees waived, then filed suite when they refused to do so.
The Valles alleged that the bank:
- Did not warn customers when the ATM or POS transactions they were conducting would cause their accounts to be overdrawn;
- Failed to document ATM withdrawals and POS purchases in the order in which they occurred in statements, thereby intentionally misleading customers;
- Provided customers with inaccurate balance information on their ATM transactions.
The bank has been ordered to pay its customers for the penalties within 60 days of the decision, which happened on Aug. 6.