(CN) – Bank of America won its appeal of a class-action judgment requiring it to pay $1 billion or more to customers who objected to their Social Security funds being deducted from one account when another is overdrawn.
Paul Miller and other Bank of America account holders cited the court’s 1974 decision in Kruger v. Wells Fargo Bank, which protected Social Security and other public benefit funds from being taken by a bank in order to satisfy a credit card debt.
However, Justice Moreno affirmed the lower court’s ruling for the bank, citing amendments to California’s Financial Code that the Legislature enacted one year after the Kruger decision.
Those amendments specifically exclude overdrafts and bank charges from the definition of debt outlined in the statute.
“Bank of America’s practice of recouping overdrafts and charging insufficient funds fees is permissible,” Moreno wrote, “in light of the Legislature’s unequivocal statement that overdrafts and bank charges are not debts.”