Article

Continuous Overdraft Fees Are Not Interest, 1st Circuit Rules in Fawcett

Thomson Reuters; Consumer Financial Services Law Report: Volume 23, Issue 2

05 Jun 2019
Reprinted with permission.

Morrison & Foerster partner James McGuire and associate Lauren Erker jointly authored the thought leadership piece “Continuous Overdraft Fees Are Not Interest, 1st Circuit Rules in Fawcett” for Thomson Reuters Consumer Financial Services Law Report: Volume 23, Issue 2.

The article analyzes the recent wave of litigation challenging whether “continuous” or “extended overdraft fees” – fees that banks charge when deposit accounts remain overdrawn – are “interest.”

The recent 1st U.S. Circuit Court of Appeals split decision in Fawcett v. Citizens Bank, N.A. concluded that continuous or extended overdraft fees are not interest. The majority’s reasoning may not prove persuasive in other circuits, however, resulting in a circuit split that will ultimately need to be adjudicated by the Supreme Court.

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