June 2, 2009

Court: Bank of America can keep fees

The California Supreme Court has sided with Bank of America Corp., saying it can charge overdraft fees on accounts that include Social Security deposits.

In the ruling, the bank overturned a 2004 ruling that sided with depositors, some of whom lost 20 percent of their Social Security benefits to overdraft fees as soon as the monthly benefits were deposited, The Los Angeles Times reported Tuesday.

The case relied on a 1974 court ruling that said banks could not take government benefits to cover debt on credit card accounts. On Monday, however, the court ruled Bank of America could take government benefits to cover checking account fees.

A ruling the other way could have cost Bank of America more than $2 billion, attorney James Sturdevant told the Times.

Sturdevant, who represented the Social Security recipients, said the ruling affects the poorest of the poor.

They don't have a credit rating. They live on $800 a month, he said.