How to Get $78 From Bank of America

If you were hit with an overdraft fee from Bank of America (BAC) (or one of the banks it acquired) between 2000 and 2007, you may be in for a little cash.

Bank of America recently settled a class-action lawsuit that alleged it (and by extension, Fleet Bank, LaSalle Bank and U.S. Trust Company, which it acquired during that period) changed the posting order of transactions and embarked on other activities in order to increase the revenue it received from non-sufficient funds fees, overdraft fees and similar charges. The lawsuit, which was settled for $35 million, also alleged that the bank failed to warn customers that certain transactions were triggering fees. Even though Bank of America denies any wrongdoing, it is agreeing to pay up to $78 per account holder.

That amount, however, is only a fraction of the $368 the average household pays for overdraft fees each year, according to Bretton Woods, a financial services advisory firm.

Invoking fees has turned into a booming business for the banks. Banks and credit unions brought in more than $37 billion in overdraft fees in 2008. Increased competition for deposits amid the credit crunch and rising defaults has led banks to rely more heavily on fee revenue than on income from loans, explains G. Michael Flores, CEO of Bretton Woods. “They have to bid down on what they charge for a loan and bid up on what they offer in interest [on savings],” he says. And there are even a few banks that have squeezed the margin so much that fee income is all they have.

As a result, banks are making it so easy to trigger fees that even diligent checkbook-balancing consumers are being forced to pay up for overdrafts, non-sufficient funds and returned checks. Most banks, for example, reorder daily transactions so that purchases clear in order from largest to smallest, with any deposits posting last. “Right now, consumers don’t have a choice whether to use this unsolicited line of credit or not,” says Chi Chi Wu, a staff attorney for the National Consumer Law Center, a consumer advocacy group. “They often trip it unknowingly.” (For more sneaky overdraft traps -- and ways to avoid them -- click here.)

Consumer advocates are hopeful that the Federal Reserve will soon pass rules governing overdraft fees. Before the Fed passed new credit card rules in December, it withdrew a section allowing consumers to opt out of a bank’s overdraft protection. The Fed has said it plans to re-address overdraft fees as a separate issue sometime this year.

In the meantime, there’s no downside to claiming a little free money from fees already incurred. Here’s how Bank of America customers can qualify for and claim the cash:

Deadline: May 1, 2009.

Eligibility: Payouts are for account holders at Bank of America or its acquired banks. You must have been charged an insufficient funds fee, overdraft fee, returned item fee, or similar fee within a set period of time: Bank of America (Dec. 6, 2000 through Dec. 31, 2007), Fleet Bank (April 1, 2004 through Dec. 31, 2007), U.S. Trust Company (July 1, 2007 through Dec. 31, 2007), or LaSalle Bank and LaSalle Bank Midwest (Oct. 1, 2007 through Dec. 31, 2007). During that time, you must also have had access to your account through a debit or other bank card.

Payout: Up to $78 per claimant, depending on the number of claims.

Filing Procedure: Fill out the forms online, or print out a version to mail in. Simply provide your name, address, telephone number and a few details about eligibility (dates you were a customer and the eligible account number). You do not need to detail specific instances when you were charged a fee. If you’d rather not send your account number, you can specify your home address at the time you believe a fee was incurred.