By Joe Pinchot
Herald Staff Writer
A federal judge last month approved a class action settlement of two lawsuits filed over the resequencing of debit card transactions at Hermitage-based First National Bank.
While resequencing – processing transactions out of chronological order to generate more overdraft fees – is legal and FNB denied any wrongdoing or liability, the bank agreed to the settlement and to change its disclosure and customer reporting practices to avoid the costs of fighting the suits.
The bank set aside $3 million for the settlement, of which $1 million will go for legal fees, $103,353 for reimbursement of legal expenses and $3,000 each in “case contribution awards” to the plaintiffs, Kimberly and Kevin Ord and Joan Clarey.
That leaves an average of almost $30 each for the 63,319 customers eligible to receive settlement benefits through checks or credits to their accounts. That amount could be lower as settlement administration costs also are to be pulled from the settlement pool.
The class is defined as FNB customers who incurred overdraft fees as a result of resequencing from June 1, 2006, through Feb. 8.
The bank agreed to modify its disclosures on how it processes overdraft transactions and change its paper account statements to show the actual order in which the bank posts transactions.
Resequencing has been the subject of lawsuits against larger financial institutions that resulted in settlements in the hundreds of millions of dollars.