Bank NSF Fees Class Action Lawsuit Moves Forward

A Superior Court judge has authorized a class action lawsuit that challenges NSF (non-sufficient funds) fees imposed by banks as excessive and illegal.

The NSF fee class action lawsuit seeks reimbursement of the NSF fees collected plus $300 in damages for each eligible Class Member. In addition, the plaintiffs seek to put an end to the practice of financial institutions imposing fees for insufficient funds when an order for payment, including a check or pre-authorized payment, is refused because there are not enough funds in the bank account.

Plaintiffs Vincent Defrance and Lou Vaillancourt-Thivierge initially filed the application for authorization of the NSF fee class action lawsuit in September 2016.

According to the complaint, the practice of imposing NSF fees violates the Consumer Protection Act which prohibits merchants from charging penalties with amounts that are fixed in the contract.

The plaintiffs also argue that the $40 to $65 NSF fees are exorbitant and abusive.

What are NSF Fees?

NSF fees, or non-sufficient funds fees, are a type of penalty imposed when an individual has written a cheque but does not have enough money in their bank account to cover the cheque amount when it is cashed.

When this situation happens, many banks and credit unions charge extra fees to both the cheque writer and the person to whom the cheque was payable. NSF cheques are commonly referred to as “bounced” cheques.

Unlike overdraft fees, which are charged when a payment is accepted but causes the account to be overdrawn, NSF fees are charged when a payment is rejected and returned to the chequing account.

Most Canadian provinces have laws that prohibit excessive or abusive fees. However, many financial institutions allegedly continue to charge NSF fees. The plaintiffs’ lawsuit is one important challenge to this practice and, if successful, it could put an end to financial institutions’ widespread practice of charging NSF fees.

Who Qualifies as a Class Member in the NSF Fees Lawsuit?

Ten banks are named in the NSF fee class action lawsuit, including the Bank of Montreal, Canadian Imperial Bank of Commerce, Laurentian Bank of Canada, Manulife Bank of Canada, National Bank of Canada, Bank of Nova Scotia, Royal Bank of Canada, HSBC Bank Canada, Tangerine Bank, The Toronto-Dominion Bank. Approximately 250 Caisses Desjardins are also named as defendants.

According to the NSF fee class action lawsuit, the financial institutions imposed illegal fees ranging from $45 to $65 on Quebec customers.

The NSF fee class action lawsuit seeks to certify two groups of Class Members. The first includes Quebec residents who have held an account with one of the bank defendants, and from whom the bank refused a payment order (such as a check or pre-authorized payment) and imposed NSF fees that the customer paid since Sept. 12, 2013.

The second includes Quebec residents who have held an account with one of the defendant Caisses Desjardins, and from whom Caisses Desjardins refused a payment order (such as a check or pre-authorized payment) imposing NSF fees that the customer paid since Feb. 6, 2014.

The bank NSF fee class action lawsuit was authorized on Jan. 21, 2019. The judge approved a plan to notify eligible Class Members about their rights under the NSF fee class action lawsuit.

The deadline to opt out of the NSF fee class action lawsuit passed on Dec. 30, 2019.

Bank & Credit Union NSF Fee Class Action Lawsuits

Consumers have been increasingly burdened by bank fees, including overdraft and NSF fees, for decades. In 2009, Ottawa-based Democracy Watch claimed that the financial institutions were taking advantage of a legal grey area and asked the federal government to investigate the matter.

Some consumers have reported being subjected to continuous overdraft fees over periods that can last several days for accounts that have insufficient funds. As a result, they are faced with even more fees.

If you believe you were charged unfair NSF fees by your Canadian bank or credit union, you may qualify to join a nationwide investigation into these charges and potentially recover the fees that you paid.

If you are a U.S. consumer who was charged NSF fees by your bank, you may qualify to join a similar NSF fee class action lawsuit investigation that is currently seeking potential U.S. plaintiffs.

Has your Canadian bank or credit union charged you excessive overdraft fees or NSF fees within the last five years? Submit your information for a free case evaluation. 

The plaintiffs are represented by Me Charles-Antoine Danis and Me Jean-Sébastien Neault of Cabinet Danis inc.

The Bank NSF Fee Class Action Lawsuit is Vincent Defrance, et al. v. Bank of Montreal, et al., Case No. 500-06-000808-168, in Montreal Superior Court, Canada. 

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