BofA Gets Reprieve From Appeals Court on $1.5 billion Judgment

by Mike Bevel, CollectionIndustry.com

In time for the holidays, a Californian appeals court has overturned a $1.5 billion judgment that Bank of America Corp. was ordered to pay senior citizens, according to The Associated Press. This means Bank of America won?t have to hand-make holiday gifts out of popsicle sticks and glitter.

Bank of America had been dinged for taking check-overdraft and other fees out of direct-deposit accounts set up to receive Social Security benefits.

In 2004, a jury found Bank of America’s actions violated California banking laws that prohibit banks from taking Social Security benefits to recover customer debts.

Bank of America, of course, disagreed with this characterization of its banking practices. And now, the 1st District Court of Appeal in San Francisco has agreed: Bank of America didn?t run afoul of state banking laws. The court ruled that the lawsuit misapplied a 1974 California Supreme Court decision outlawing banks from using deposited public benefits to pay the account holder’s separate credit-card account.