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California appeals court sides with B of A in billion-dollar ruling
November 20, 2006
San Francisco Chronicle: A state appeals court Nov. 20 overturned damages of more than $1.3 billion for more than a million Bank of America customers with Social Security accounts. The court upheld the banking industry practice of deducting money from the accounts to pay bank fees and overdrafts. A San Francisco judge and jury had found the B of A policy illegal in February 2004, saying California law prohibits a bank from paying debts by dipping into direct-deposit accounts containing Social Security and other public benefits. The potential financial impact of the case was large, because virtually all banks follow the same practice of using funds in the benefit accounts to cover overdrafts.
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