San Antonio-based Frost Bank faces a proposed class-action lawsuit claiming it subjected customers to “crippling” overdraft fees, according to court documents.
Plaintiffs LaNita Criswell and LaSheena Neal filed a lawsuit last week in the U.S. District Court for the Western District of Texas, accusing Frost of having a “routine policy and practice of charging its customers Overdraft Fees on transactions that did not overdraw an account.”
Criswell alleged she was assessed $35 overdraft fees in January 2021 for debit transactions that settled on that day, even though funds had been deducted and held at the time of the transaction. Neal alleged she experienced the same thing in January 2023.
Frost assessed overdraft fees on the same transactions “when they purportedly settle days later into a negative balance,” the lawsuit alleged.
Plaintiffs said their proposed class action includes more than 100 members, with claims totaling more than $5 million.
Frost’s contract promises the bank “will only charge OD Fees on items when such items cause the account to have a negative balance,” according to the lawsuit.
Frost Bank spokesperson Bill Day said the bank “eliminated fees that are the subject of the lawsuit in June,” according to the San Antonio Express-News. Frost eliminated nonsufficient funds fees in 2022, and at the same time modified its overdraft protection so as to charge customers only if they overdrew checking by $100 or more.
Day told Banking Dive it was Frost’s policy not to comment on pending litigation.
This isn’t the first time Frost has been accused of unfair overdraft practices. Plaintiff Theodore Woods in 2021 filed a potential class-action lawsuit over “unfair and unconscionable collection of overdraft fees” on certain transactions.
A district court judge in 2022 ordered that the dispute be heard, but on Woods’ behalf alone. The dispute was resolved and the case dismissed later that year, according to the Express-News.
Overdraft fees have been a hot topic in recent years, with regulators flagging unfair and deceptive practices. Many banks have pared down or eliminated overdraft fees entirely.
Plaintiffs in last week’s case against Frost are seeking damages and restitution for an alleged breach of contract by the bank.
