CIBC agreed to a proposed $10 million settlement for certain non-sufficient funds (NSF) fees the bank charged its customers, which the suit says “disproportionately fall on low-income Canadians.”
Customers may be entitled to a refund of NSF fees if the settlement is approved by the Ontario Superior Court of Justice, which is scheduled to hear in October.
The lawsuit specifically focuses on NSF fees charged by CIBC for failed repeat pre-authorized debit transactions between September 21, 2020 and May 31, 2024, which the class action claims violate consumer protection laws.
Details of the lawsuit settlement were announced Thursday in a joint statement from CIBC and Koskie Minsky LLP, the law firm that originally brought the class action lawsuit against the bank in September 2022.
According to the statement, the proposed settlement agreement was reached on June 24, 2026, after negotiations through a mediator.
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According to the statement, CIBC neither admitted nor denies any liability, and if the settlement is approved, the bank agreed to directly transfer funds into the bank accounts of eligible customers, known in the suit as “class members.”
These customers may have been charged more NSF fees than they should have been if the same pre-authorized payment or check bounced more than once due to insufficient funds.
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For example, if a subscription service automatically charges a customer, but that customer has zero dollars in their bank account, then the bank may charge them an NSF fee. If the same service makes another attempt to charge the customer for the same payment, CIBC may charge another NSF fee for each additional attempt.
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The class action lawsuit alleges that while CIBC had the right to charge NSF fees on payments when customers had insufficient funds, repeating the same payment multiple times violated the terms of their agreement with customers.
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One example in the class action involves a plaintiff who had a $7.90 pre-authorized fee charged to his CIBC account in 2022 when he did not have enough funds. The bank then charged them the standard NSF fee of $45.
The next day, the same transaction for $7.90 was resubmitted to CIBC for payment without the plaintiff’s knowledge. CIBC again rejected the deal and charged the plaintiff a second NSF fee of $45.
In this example, the plaintiff was charged NSF fees totaling $90 for one payment of $7.90.
Although the class action notes that CIBC’s contract with customers during this period clearly stated that it could charge a $45 NSF fee if pre-authorized payments were attempted with an insufficient account balance, charging a separate fee for each attempt allegedly violated the terms of the contract.
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The class action lawsuit states that CIBC did not have the right to charge plaintiffs such charges more than once in a single transaction, even if the first attempt failed.
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The CIBC class action claims that by charging customers multiple times for what is considered a single payment, it was able to enrich itself by tens of millions of dollars a year, and most of those fees negatively impacted low-income Canadians.
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“The burden of these duplicate NSF fees falls disproportionately on low-income Canadians, who are more likely to maintain low bank balances and more likely to use online merchants instead of credit cards,” the class action lawsuit states.
“As a result of its illegal activities, CIBC made enormous profits, amassing tens of millions of dollars a year by charging illegal fees to group members.”
Earlier this year, the federal government adopted new rules regarding NSF fees, including a $10 cap on each fee, which was previously as much as $50.
At the same time, the federal government also prohibited the collection of multiple NSF fees on the same transaction from the same account within two days, effectively creating a “cooling off” period. It also prohibited NSF fees from being charged if the account deficit is less than $10.
If the settlement is approved in October, affected consumers will automatically be included in the class unless they opt out.
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