SAN FRANCISCO—The Ninth Circuit Court of Appeals has ruled that Bank of America can force business checking account customers into arbitration in a proposed class action accusing the bank of improperly charging overdraft fees, handing the bank a procedural victory in the long-running dispute over its account practices, Law360 reported.
The appeals court determined that the business customers were bound by arbitration provisions contained in their deposit agreements and therefore could not pursue their claims collectively in federal court. The plaintiffs had alleged Bank of America assessed unfair overdraft charges on business checking accounts and sought to litigate the claims as a class action before a judge. Instead, the Ninth Circuit said the dispute must proceed through private arbitration, Law360 said.
The ruling adds to a broader series of legal fights involving major banks’ overdraft and non-sufficient-funds fee practices, which have drawn scrutiny from regulators, consumer advocates and plaintiffs’ attorneys in recent years. In 2023, the CFPB ordered Bank of America to refund approximately $80.4 million tied to repeated NSF fees and pay additional penalties, finding the practices violated federal consumer protection laws.
Banks have increasingly relied on arbitration clauses and class-action waivers in deposit agreements to limit courtroom litigation over fees and account practices. Bank of America recently updated portions of its deposit agreements to expand mandatory arbitration provisions, part of a broader industry trend toward steering disputes into private proceedings rather than class-action litigation.