Class Action Claims Zions Bank Violated Contracts by Charging Unauthorized Fees

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A proposed class action claims Zions Bancorporation, N.A. “takes advantage of its most vulnerable customers” by placing holds on funds from deposited checks and charging multiple insufficient funds fees for a single transaction.

Per the case, the two practices violate the bank’s customer contracts and allow Zions to generate “excessive unearned fee income for the Bank primarily at the expense of its customers who are least able to pay such fees.”

“These practices breach contractual promises, violate the covenant of good faith and fair dealing, and result in the Bank being unjustly enriched,” the 27-page complaint scathes.

Zions operates in 11 western states, including Arizona, California, Colorado, Idaho, Nevada, New Mexico, Oregon, Texas, Utah, Washington and Wyoming, under the local brands AmegyBank, California Bank & Trust, The Commerce Bank of Oregon, The Commerce Bank of Washington, National Bank of Arizona, Nevada State Bank, VectraBank Colorado, and Zions Bank, the lawsuit explains. According to the complaint, Zions uses a uniform Deposit Account Agreement across its eight brands to govern its relationships with customers.

Despite promising in its account agreements that at least a portion of deposited checks will be available on the first business day following the deposit, Zions places “extended holds” on a customer’s entire deposit in order to “maximize fee revenue,” the lawsuit alleges. Although Zions’ deposit agreement indicates that most cash and check deposits will be available immediately or on the following business day, the document provides that the bank, for some items, will delay the availability of deposited funds until the second business day following the date of deposit, the suit says.

Nevertheless, Zions promises that at least $225 of the deposit will be available on the first business day, and that the bank will notify the customer whenever the funds will not be available and indicate when they do become available, according to the suit. The lawsuit claims, however, that Zions fails to fulfill its contractual promises and instead employs a practice of “arbitrarily” placing holds on the entirety of customers’ check deposits in order to generate fees. Per the suit, this practice is tied in with Zions’ alleged policy of charging improper insufficient funds fees.

“If funds are arbitrarily declared to be unavailable then the customer’s balance is not sufficient to cover other transactions, often netting the Bank pure-profit fees such as insufficient funds fees,” the complaint charges.

The plaintiff says Zions’ wrongful withholding of a check deposit in violation of its contractual obligations has caused him to be assessed $420 in insufficient funds (NSF) fees over a period of less than a month. Although the plaintiff deposited a $1,101.83 check from a major corporation on February 8, 2021, Zions, the suit says, failed to make available any portion of the funds until at least February 17 without notifying the plaintiff. As a result, the man incurred 12 NSF fees that would not have occurred had Zions upheld its contracts by not placing a hold on the plaintiff’s deposit, the case alleges.

“Each of these 12 Insufficient Funds (NSF) Fees was improper because, if the Bank made the deposit for $1,101.83 available within one business day as required in the applicable contracts, [the plaintiff’s] available balance would always have been positive during the time period in question,” the complaint argues.

The lawsuit additionally claims that even if Zions had made $225 of the check available as promised in its contract, the plaintiff would have incurred only $315 in allegedly improper fees.

As the complaint tells it, Zions, “[e]ither way you cut it,” has violated its customer contracts by charging improper fees and “pocket[ing] unearned income”:

The lawsuit goes on to allege that Zions has further violated its fee schedule and other contractual documents by charging more than one $35 NSF fee on a single debit item despite promising to only charge one fee per item. The plaintiff claims he was charged a $35 NSF fee when a check he wrote was returned, and then assessed an additional $35 fee when the same check was “run back through a second time a few days later.” The plaintiff was then assessed an additional $70 in fees when a second check was returned and then reprocessed, according to the case.

Per the suit, there is “zero indication” anywhere in Zions’ contractual documents that the same “check, ACH, or wire transaction” can incur multiple fees, and customers understand any authorization for payment to be a single item subject to a single fee.

“Taken together, the representations and omissions identified above convey to customers that all submissions for payment of the same transaction will be treated as the same ‘item,’ which the Bank will either authorize (resulting in an overdraft item) or reject (resulting in a returned item) when it decides there are insufficient funds in the account,” the complaint states. “Nowhere does Zions disclose that it will treat each reprocessing of a check or ACH payment as a separate item, subject to additional fees, nor do Zions customers ever agree to such fees.”

The lawsuit claims Zions has, “[b]y simply reprogramming its computer systems,” “opened a spigot of millions of dollars in unearned fee income that was never disclosed or agreed to by Zions customers.”

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