Huntington Bank overdraft fee practices have been challenged in multiple class action lawsuits, most notably the *Jacobs v. Huntington Bancshares Inc.* settlement that resulted in a $15.9 million recovery for affected customers. The lawsuit alleged that Huntington (which acquired FirstMerit Bank) deliberately processed debit card transactions from highest to lowest dollar amount rather than in chronological order—a practice that maximized overdraft fees by depleting account balances faster than customers expected.
For example, a customer with $100 in their account who made three purchases of $60, $30, and $40 in that order would have paid overdraft fees on all three transactions under highest-to-lowest processing, even though chronological processing would have only triggered fees on the final purchase. Overdraft fee disputes have become one of the most common banking consumer grievances in the United States, costing customers billions annually. Huntington’s case reflects a broader pattern of banking practices that drew regulatory scrutiny and multiple settlements across the industry. Understanding your rights and whether you qualify for compensation from these settlements requires knowing the specific allegations, timeline, and current protections available to customers.
Table of Contents
- How Did Huntington Bank’s Transaction Processing Increase Overdraft Fees?
- What Was the FirstMerit Settlement Amount and Coverage?
- The FirstMerit Merger and Huntington’s Overdraft Practices
- How Do You Determine If You Were Eligible for the FirstMerit Settlement?
- What Warning Signs Should You Watch for in Your Bank’s Overdraft Practices?
- What Are Huntington Bank’s Current Overdraft Policies?
- Broader Regulatory Changes and the Future of Overdraft Practices
- Conclusion
How Did Huntington Bank’s Transaction Processing Increase Overdraft Fees?
Huntington’s alleged practice of posting transactions from highest to lowest amount—rather than the order customers made them—is known as “resequencing.” This practice is mathematically designed to trigger more overdraft fees. If a customer made four transactions totaling $150 with only $100 in their account, processing them chronologically might result in just one overdraft fee. But processing the largest transactions first could result in multiple overdraft fees across several transactions.
The FirstMerit lawsuit documented extensive evidence that this wasn’t accidental. Internal bank documents reportedly showed that the resequencing practice was a deliberate choice that generated substantial fee revenue. Customers were generally not informed that Huntington processed transactions out of order, and the account disclosures did not clearly explain how this practice affected overdraft fees. A customer checking their transaction history online might believe they had sufficient funds at the time of each transaction, only to discover later that overdraft fees had been charged because of the resequencing.
What Was the FirstMerit Settlement Amount and Coverage?
The *Jacobs v. Huntington Bancshares Inc. and The Huntington National Bank* settlement, finalized in March 2017, totaled $15.9 million. This consisted of $8.9 million in direct cash payments to eligible class members and $7 million allocated to a debt forgiveness fund.
The settlement was approved by the federal court without requiring Huntington to admit wrongdoing, a common provision in large banking settlements that nonetheless provides compensation to affected customers. The settlement’s debt forgiveness component was particularly important because it addressed overdraft fees that had already harmed customers’ financial records. However, like most class action settlements, the actual payout per customer depended on the number of valid claims filed. Customers who received the settlement had to submit claims proving their account history with Huntington during the relevant period and their eligibility based on documented overdraft fees. Some eligible customers never filed claims, meaning unclaimed funds from the settlement sometimes reverted to other purposes or were donated to cy pres recipients—a limitation of class actions that frustrates many consumer advocates.
The FirstMerit Merger and Huntington’s Overdraft Practices
FirstMerit Bank was acquired by Huntington Bancshares in 2016, and the overdraft practices that led to the lawsuit predated the acquisition. The lawsuit was filed before the merger was completed, and Huntington agreed to honor the settlement obligations as part of the acquisition. This highlights an important issue for banking consumers: when banks merge, customers often inherit the practices and liabilities of both institutions.
The FirstMerit case became a landmark example because it provided documented evidence of intentional resequencing practices. Unlike some overdraft fee disputes where banks claim the practice is standard industry procedure, the FirstMerit documents showed explicit decisions to implement transaction resequencing with knowledge of the financial impact. This distinction made it one of the stronger overdraft-related settlements and served as a precedent for subsequent regulatory actions against other banks engaging in similar practices.
How Do You Determine If You Were Eligible for the FirstMerit Settlement?
Eligibility for the FirstMerit settlement generally required that you held a checking account with FirstMerit (later Huntington) between approximately 2007 and the settlement date in 2017, and that you incurred overdraft fees during that period. The specific eligibility window and the exact calculation of claims varied based on documentation and the settlement agreement’s terms. Class action notices were mailed to known class members, but many customers never received notification, particularly if they had closed their accounts or changed addresses.
If you believe you were eligible, the claim filing deadline for the FirstMerit settlement has long passed (settlements typically allow one to two years for claims), meaning compensation from this particular settlement is no longer available. However, your account history during that period may still be relevant if you experienced other overdraft-related issues or if other claims remain open. This underscores an important limitation: class action settlements are time-sensitive, and missing the deadline means losing compensation, even if you were directly harmed.
What Warning Signs Should You Watch for in Your Bank’s Overdraft Practices?
Several practices indicate that a bank may be engaging in potentially problematic overdraft fee strategies. Resequencing (posting transactions out of chronological order) is the most obvious, but others include charging multiple overdraft fees on a single day for different transactions, not offering a grace period before charging fees, or not clearly disclosing how transactions are posted. Banks are required to disclose their overdraft policies in account agreements, but these disclosures are often written in dense legal language that many customers never read.
Another warning sign is unusually high overdraft fee charges relative to your account activity. If you made only a few transactions but were hit with multiple overdraft fees, that may indicate resequencing or aggressive fee practices. Banks may also manipulate the timing of posting withdrawals (like debit card transactions) versus deposits, posting withdrawals before deposits to maximize overdraft scenarios. The CFPB has documented cases where banks used bonus structures to incentivize employees to enroll customers in overdraft protection services without clear consent, a practice that TCF National Bank paid $25 million to resolve.
What Are Huntington Bank’s Current Overdraft Policies?
As of current disclosure documents, Huntington Bank charges up to $15.00 per overdraft occurrence, with a maximum of 3 overdraft fees charged per day. The bank also maintains a “safety zone” that waives overdraft fees if your account is overdrawn by $50 or less. These current terms represent the modern standard for large banks, though they resulted from years of regulatory pressure and litigation.
Huntington’s current overdraft policies are more consumer-friendly than the resequencing practices that led to the FirstMerit settlement, but customers should understand that even these current terms allow for substantial fees under certain circumstances. A customer who overdraws their account by $51 and makes three separate transactions in a single day could theoretically face up to $45 in overdraft fees ($15 x 3). The safety zone only protects against smaller overdrafts, and consumers who live paycheck-to-paycheck remain vulnerable to cascading fees during unexpected expenses.
Broader Regulatory Changes and the Future of Overdraft Practices
The FirstMerit and similar settlements have prompted increased regulatory scrutiny of overdraft practices industry-wide. The Consumer Financial Protection Bureau (CFPB) has taken multiple enforcement actions against banks engaged in deceptive overdraft enrollment and aggressive resequencing. These actions have made it clear that banks can no longer rely on fine-print disclosures to justify practices designed primarily to generate fees rather than serve customer needs.
Looking forward, the regulatory landscape continues to evolve. Some states have implemented additional protections beyond federal requirements, and consumer advocates continue pushing for reforms that would limit overdraft fees, require affirmative opt-in for overdraft protection, or eliminate resequencing practices entirely. Banking industry resistance to stricter overdraft regulations remains significant, but the momentum from settlements like FirstMerit demonstrates that courts and regulators are increasingly willing to penalize aggressive fee practices.
Conclusion
The Huntington Bank overdraft fee practices class action demonstrates how banking institutions have historically used transaction processing rules and fee structures to maximize revenue at customers’ expense. The $15.9 million FirstMerit settlement provided compensation to many affected customers, but the time-sensitive nature of class action claims meant that many eligible customers never received compensation.
The settlement also highlighted the importance of scrutinizing your bank’s overdraft disclosure and monitoring your account for signs of problematic practices. If you have historical overdraft issues or believe you were harmed by bank practices, reviewing your old account statements and understanding the statute of limitations for separate claims may still be worthwhile. For current customers of Huntington or other large banks, the best protection remains actively monitoring your account balance, understanding your bank’s specific transaction posting rules, and considering whether to opt out of overdraft protection for debit transactions—a choice that will prevent overdraft fees entirely but requires more careful account management.