Synovus Financial Corp. has agreed to a $24 million settlement of a class-action lawsuit concerning overdraft fees it charged customers for nearly a decade at its Georgia banks.
The settlement, which includes Columbus Bank and Trust and more than a dozen other Synovus divisions, could cost the bank up to $16 million in returned fees to customers, the company said in a notice mailed to potentially impacted account holders.
Another $8 million will go to attorneys’ fees and expenses in the case, which was filed in the State Court of Gwinnett County by two customers, Thomas Griner and Fern Cohn, according to the class-action settlement document sent to customers.
The lawsuit, filed in July 2010 by Griner, covers the period between July 10, 2004, and Feb. 3, 2014, when the plaintiff alleges the Synovus banks charged excessive overdraft fees on debit-card purchases or ATM cash withdrawals using debit cards.
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“A lawsuit filed by customers of Synovus Bank ... claims that the fees Synovus charged in connection with overdrafts arising from a (point of sale) or ATM debit card transaction constitutes interest, and as a result, Synovus has violated Georgia’s usury laws, committed conversion and is liable to plaintiffs for money had and received,” the notice approved by the Gwinnett County State Court said.
Synovus, on the other hand, according to the notice, “denies that the fees it charges in connection with overdrafts constitute interest, and further denies that it is liable for damages under any of plaintiffs’ claims.”
Headquartered in Columbus, Synovus said the settlement agreement has been made “without admitting liability,” with current and former Georgia resident bank customers eligible to participate if they have been charged an overdraft fee over that nearly 10-year period.“We cannot comment on pending litigation,” the bank said via email from spokesman Greg Hudgison.
Synovus advised those interested in more information on the cases to refer to the firm’s recently filed annual report on Form 10-K and its third-quarter report on Form 10-Q. Those mandatory filings are submitted to the U.S. Securities and Exchange Commission.
The proposed settlement has been “preliminarily approved” by the court, according to the Synovus notice to customers. A “fairness hearing” will take place May 20 in Lawrenceville, Ga., for anyone who objects to the settlement, prior to the case being officially settled.
“From our perspective, it’s a very good settlement for the class,” Atlanta attorney Steven Rosenwasser said Monday. He is with the law firm — Bondurant, Mixson & Elmore — which litigated the class-action effort and is also currently involved in another overdraft fee case against Atlanta-based SunTrust Bank.
The Synovus case stemmed from overdraft fees charged on debit-card transactions and ATM withdrawals, apparently with multiple overdrafts from an account occurring on the same day, and sometimes for small purchases.
The settlement notice did not say how much the overdraft fees were during the nearly decade-long period covered in the litigation. The Synovus/CB&T website on Monday showed standard fees of $36 per overdrawn occurrence ($29 for military accounts) and a collection fee of $35 if the account remains overdrawn for seven days in a row.
“Among other things, the settlement provides for injunctive relief, which should minimize the number of overdrafts that Georgia consumers face moving forward,” Rosenwasser said. “For example, there’s a cap on the number of overdrafts you can occur in a single day. And there’s a de minimis exception where if you have a very small overdraft, you wouldn’t be charged an overdraft fee.”
Synovus, in the official notice to customers, said it has made changes in its overdraft practices, policies and procedures, but did not say specifically what those were, although they will be costly.
“The changes have resulted in significant losses in revenue to Synovus and savings to the settlement class, valued in excess of $10 million,” the notice said.
Those Synovus customers who wish to take part in the financial settlement have been asked to mail back a form to the claims administrator, with a postmark deadline of June 5. Those who did not receive a notice from Synovus but feel they are part of the settlement class should call 1-877-916-8558.
Since the original filing on July 30, 2010, the class-action lawsuit has been working its way through several legal maneuvers, including motions to dismiss and appeals of various orders, according to the Synovus 10-K filing with the SEC.
This is the second major legal settlement by Synovus in recent months. The bank in October agreed to pay $11.8 million in a shareholder lawsuit filed in July 2009 by the City of Pompano Beach General Employees’ Retirement System.
The settlement, also mentioned in the 10-K filing, was litigated in U.S. District Court, Northern District of Georgia. The Labourers’ Pension Fund of Central and Eastern Canada, and the Sheet Metal Workers’ National Pension Fund, also were part of that case.
It centered on Synovus loans made to the Georgia coastal resort of Sea Island, with plaintiffs alleging the bank and top executives did not disclose in a timely manner the extent of loan losses to the resort, which went into default amid the Great Recession. The loan losses were reportedly more than $200 million.
The shareholders alleged the lack of information by the company led to the bank’s stock price becoming “artificially inflated” before shares eventually tumbled to extreme lows.
As in the current overcharge fee case, Synovus did not admit to liability in the Sea Island-related lawsuit. In that settlement, the bank said its payout is “fully covered” by insurance.
On Monday, it did not say if the $24 million in the overdraft settlement also is insured.
Here are the Synovus banks in Georgia listed in the proposed class-action overdraft fee settlement notice to potentially impacted customers:
Bank of North Georgia
Columbus Bank and Trust Co.
Sea Island Bank
CB&T Bank of Middle Georgia
The Coast Bank of Georgia
First State Bank and Trust Co. of Valdosta
Georgia Bank & Trust
Bank of Coweta
First Community Bank of Tifton
Citizens First Bank
Commercial Bank & Trust Co. of Troup County
Cohutta Banking Co.