Umpqua to Pay $2.9M to Settle Debit Card Case

     SAN FRANCISCO (CN) – A federal judge on Tuesday granted final approval to a $2.9 million settlement between Umpqua Bank and debit card users who claim the financial institution squeezed them for overdraft fees.
     Lead plaintiffs Amber Hawthorne, Christopher and Victoria Kneer filed a putative class action against Umpqua in December 2011, filing a third-amended complaint in California’s Northern District in January 2014.
     Their complaint alleged that Umpqua used a special software to re-order debit card transactions, so that higher dollar amount transactions are assessed against Plaintiffs’ accounts first, even if they occurred later in time than lower dollar amount transactions.
     The plaintiffs claimed this had the effect of maximizing the number of overdraft fees, imposing more fees than Plaintiffs would otherwise pay, and depleting Plaintiffs’ accounts more quickly than would otherwise be the case.
     They also called Umpqua’s customer account agreement misleading and said the bank “provides inaccurate balance information to its customers through its electronic network,” informing them “that they have a positive balance when, in reality, they have a negative balance, despite the bank’s actual knowledge of outstanding debits and transactions.”
     The parties agreed to a settlement on June 19, 2014, and U.S. District Judge Jon Tigar granted preliminary approval three months later.
     Tigar based Tuesday’s final approval, in part, on a contract that discloses Umpqua’s practice of “re-sequencing” debit transactions.
     He added that losing the case after further litigation would leave the plaintiffs with nothing, except attorneys’ fees.
     “Plaintiffs acknowledge that they faced the risk of losing at summary judgment, at trial, or on appeal in light of Umpqua’s contractual and other defenses,” Tigar said. “Without a settlement, plaintiffs would face additional years of costly litigation and risk recovering nothing. Given the relatively small value of individual class members’ claims, litigation would be impractical, requiring the expenditure of both public and private resources disproportionate to individual claims.”
     Judge Tigar awarded $725,000 in attorneys’ fees, representing 25 percent of the settlement fund, and an additional $105,990.25 for reimbursement of costs and expenses.
     Attorneys for the parties could not immediately be reach for comment.

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