CALGARY — A proposed $10 million settlement could see thousands of CIBC customers compensated for non-sufficient funds (NSF) fees that were allegedly charged multiple times on the same unpaid bill.The Canadian Imperial Bank of Commerce (CIBC) has agreed to settle a class action lawsuit over its practice of charging repeated NSF fees on failed pre-authorized debit transactions, according to a joint announcement by CIBC and law firm Koskie Minsky LLP.The proposed agreement, reached June 24 following negotiations and mediation, still requires approval from the Ontario Superior Court of Justice at a hearing scheduled for October 19.According to the Canadian Press, the lawsuit focused on situations where customers lacked sufficient funds to cover pre-authorized payments such as utility bills, phone bills or gym memberships. When the payment issuer attempted to process the transaction multiple times, CIBC allegedly charged an NSF fee each time the payment was rejected.Koskie Minsky LLP, acting as class counsel, argued the practice violated consumer protection laws and the bank’s contractual obligations to customers.The claim covers customers who were charged duplicative NSF fees between September 21, 2020, and May 31, 2024.Under the proposed settlement, CIBC does not admit wrongdoing or liability. If approved by the court, eligible customers will receive compensation through direct deposits into their accounts unless they choose to opt out of the class action.The lawsuit was launched in September 2022 and received certification as a class proceeding in June 2024..Carney's Net-Zero Banking Alliance disbands after mass exodus of banks .Koskie Minsky LLP has also pursued similar legal actions against several other major Canadian banks, including the Bank of Montreal, TD Bank, Scotiabank and the Royal Bank of Canada. Settlements have already been approved or proposed in cases involving TD, Scotiabank and RBC.The proposed settlement comes months after the federal government introduced new restrictions on NSF fees aimed at reducing costs for consumers.Beginning in March, Ottawa capped NSF fees at $10 for personal and joint bank accounts. Financial institutions are now prohibited from charging NSF fees when an account is overdrawn by less than $10 and can only impose one NSF fee per account during a two-business-day period.The new regulations do not apply to business or corporate accounts.Before the changes took effect, NSF fees at Canadian financial institutions typically ranged between $45 and $48.When announcing the reforms, the Department of Finance said the fees often placed a disproportionate burden on low-income Canadians who may not have access to overdraft protection.“These fees disproportionately impact the financial well-being of low-income Canadians who do not have access to overdraft protection and can perpetuate debt cycles by reducing the amount of available funds with which a consumer could pay their bills,” the department said.The department added that NSF charges were frequently applied regardless of the size of the shortfall and could accumulate quickly when multiple payment attempts were made in a short period.
