Frost Bank, a prominent US bank, is facing the possibility of a class-action lawsuit for the second time in three years due to allegations of excessive overdraft fees. LaNita Criswell and LaSheena Neal, the plaintiffs in the lawsuit, claim that Frost Bank’s practice of imposing $35 overdraft fees on transactions that do not exceed account balances is a breach of contract and a violation of the Electronic Funds Transfer Act. They are seeking $5 million in damages on behalf of at least 100 members of the proposed class-action lawsuit.

According to Criswell and Neal, when a debit card transaction is initiated on an account with sufficient funds, Frost Bank takes funds from the customer’s checking account to cover the purchase. However, the bank still charges the $35 overdraft fee on many of these transactions, which they argue is misleading and not in line with the terms of the account contract.

Frost Bank claims that it has already removed the fees in question, and the Consumer Financial Protection Bureau (CFPB) has recently proposed a rule targeting similar fees. This is not the first time Frost Bank has faced legal action regarding its overdraft fees. In 2021, a similar lawsuit was filed by Theodore Woods, a San Antonio resident, who accused the bank of unfair and unconscionable collection practices. The case was settled and dismissed in August 2022.

In an effort to address customer concerns, Frost Bank extended its $100 overdraft grace period in June 2022. This feature allows participating customers to avoid overdraft fees if they overdraw their checking accounts by up to $100. However, the bank emphasizes that this service is discretionary and may not be available in certain cases, such as when the account has a questionable standing or a history of excessive overdrafts or irregular deposits.

With $50.8 billion in total assets and over 5,000 employees, Frost Bank is one of the largest 50 banks in the US. It remains to be seen how the class-action lawsuit will progress and what impact it may have on the bank’s reputation and operations.