American ATM users can claim compensation from a class-action lawsuit without having to prove they were impacted.
A $1.23 million class action settlement involving Flagstar Financial, formerly New York Community Bank (NYCB), addresses accusations of unfair ATM and non-sufficient funds (NSF) fees charged to American banking customers.
Newsweek contacted Flagstar Financial, which has not admitted any wrongdoing, via email outside of regular business hours for comment.
Why It Matters
The settlement underscores growing scrutiny over banking fees, consumer financial rights, and bank accountability in the U.S. financial sector.
What To Know
Flagstar Financial, which operated as NYCB until 2024, agreed to pay $1.23 million to resolve claims it imposed unfair ATM, NSF, and overdraft fees.
Plaintiffs alleged these charges contradicted the bank’s stated policies and took advantage of customers in specific transaction scenarios.
The settlement covers two groups:
- Customers with checking accounts at Flagstar Financial (then NYCB) between March 2, 2017, and January 1, 2020, who were charged certain non-sufficient funds and overdraft fees on check or automated clearing house (ACH) payments.
- Account holders charged more than one out-of-network ATM fee for withdrawals preceded by a balance inquiry between August 20, 2020, and February 20, 2024.
ACH payments refer to electronic money transfers between U.S. bank accounts.
Under the settlement, eligible class members can claim cash payments based on the fees they were charged.
Those who paid retry NSF fees and/or overdraft fees on check or ACH transactions will receive a proportional share of the settlement fund, calculated according to the total fees they incurred.
Members who were charged multiple out-of-network ATM fees on withdrawals preceded by a balance inquiry are entitled to a flat payment of $25.
Claimants will receive payments as either an account credit or a check, depending on whether they still bank with Flagstar Financial.
All eligible class members will automatically receive payment after the settlement’s final approval, with no requirement to submit proof of charges.
What Is a Class Action Settlement?
A class action settlement is an agreement that resolves a lawsuit filed on behalf of a large group of people (called a “class”) who have similar claims against a company or organization. Instead of each person suing individually, one case represents everyone affected.
When the parties agree to settle, the defendant typically pays a sum of money into a settlement fund. That fund is then distributed among eligible class members based on specific criteria—such as how much they were charged in fees or how they were affected.
What Happens Next
Eligible customers will automatically receive compensation, demonstrating a significant resolution for those affected by these practices and establishing a precedent for how U.S. banks may respond to similar allegations in the future.
Those wishing to opt out must do so by December 15, 2025. Payments are scheduled following the final approval hearing on January 13, 2026.
If the court approves the settlement, payments will be distributed afterward.
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