In 2004 the Superior Court of San Francisco ruled in favor of the Miller class, agreeing that Bank of America could not satisfy overdrafts and take fees from public money that is intended as a government safety net for its customers.
But the bank appealed, and an appeals court reversed the decision. On June 1, 2009, the Supreme Court of California upheld the reversal.
The California Supreme Court had ruled in 1974 that banks can’t deduct fees from accounts holding government benefits to recover funds owed in a separate credit card account. The Miller class argued that it was illogical to treat debts, such as credit card bills, differently from debts for bank charges. Credit card debt is outside the relationship between the bank and the customer, and a bank fee is between the bank and its customer—but both involve money owed by the customers, which the customers are under an obligation to pay back, the Miller class concluded.
The court did not agree with this argument. The court reasoned that an overdraft was a different kind of debt with a unique relationship, compared with other money that the consumer might owe. “An overdraft,” the court said, “may be the result of the bank honoring, rather than bouncing, a rent or utility payment made prior to the deposit of benefit funds.” By covering such overdrafts, the court held, the bank was protecting customers’ credit ratings and their relationship with merchants.
Lupe Linda Rios is still a Bank of America customer. She was recently charged $85 in overdraft fees, which will be taken out of her next Supplemental Security check. She is thinking of closing her account and having her checks delivered to her home.
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Robin Gerber is a lawyer and the author of Barbie and Ruth: The Story of the World’s Most Famous Doll and the Woman Who Created Her.