UMB Agrees to Settle Class Action Over Fees


Kansas City-based UMB Bank paid $7.8 million and placed tighter limits on overdraft fees as it settled a class action alleging the bank gouged customers.

The lawsuit alleged the bank systematically changed its customers’ transaction histories, reordering debit card charges so the bank had the best chance of assessing fees for insufficient funds, even when there was enough money in the account to cover the charges.

UMB denied the allegations, and in a May 2011 filing with the Securities and Exchange Commission said it was settling to avoid “any further expense and distraction” from the lawsuit.

The agreement called for:

  • Checks or deposits for an estimated 110,000 former and current account holders at the bank to be paid from the $7.8 million settlement fund;
  • Plaintiffs’ attorneys’ fees of up to 30 percent to be paid from the fund;
  • Up to $5,000 each for two named plaintiffs, to be paid separately by the bank; and
  • The costs of administering the settlement, estimated at $145,000, to be paid separately by the bank.

Class members did not have to submit claims, and plaintiffs’ attorneys estimated UMB customers in the five-year period covered by the lawsuit would recover about half of their potential damages.

In addition, UMB capped overdraft fees at four per day and refrains from charging the fees when an account is overdrawn by $5 or less, according to a motion to approve the settlement filed by plaintiffs’ attorneys in September. The bank also is considering changing the order it uses to post electronic transactions, the motion said.

The settlement followed a marathon mediation session May 10 that went for 17 hours, until 2 a.m., according to an affidavit from plaintiffs’ attorney Patrick Stueve. Discussions continued until May 13.

Stueve, of Stueve Siegel Hanson, and defense attorney John Aisenbrey, of Stinson Morrison Hecker, declined to comment beyond what was contained in court documents.

As of September, no members of the class had submitted objections, and only three asked to be excluded. They included a woman who said she was a co-signer on her grandson’s checking account, and that he “due to drug use” bounced $3,000 worth of checks. The grandmother had to make restitution for the checks, and UMB was “more than generous” in helping to erase some of the charges, the woman wrote in a letter included in court documents.

“I cannot, with good conscience, be a part of a suit such as this, in light of what went on with my grandson,” the woman wrote.

An earlier lawsuit against the bank with similar allegations, David Johnson v. UMB Bank et al., was moved to federal court, where it became part of multidistrict litigation. It was dismissed at the request of both sides, according to the motion to approve the settlement.

■  $7.8 million class action settlement - Breach of contract

 Venue: Jackson County Circuit Court

 Case Number/Date: 1016-CV34791/Oct. 31, 2011

 Judge: Charles Atwell

 Caption: Nick Allen and Marilyn Lande v. UMB Bank, UMB Bank Colorado, UMB Financial Corporation, UMB Bank Arizona and UMB National Bank of America

 Plaintiffs’ Attorneys: Patrick Stueve and Barrett Vahle, Stueve Siegel Hanson, Kansas City; Robert Ritter, Don Downing and Jason Sapp, Gray, Ritter & Graham, St. Louis; Hassan Zavareei and Jeffrey Kaliel, Tycko & Zavareei, Washington

 Defendants’ Attorneys: John Aisenbrey and George Verschelden, Stinson Morrison Hecker, Kansas City

By Heather Cole – Missouri Lawyers Media

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