CIBC has agreed to a proposed $10-million settlement over some non-sufficient funds (NSF) fees the bank charged to its customers, which the lawsuit says “falls disproportionately on low-income Canadians.”
Customers could be entitled to refunds on NSF fees if the settlement clears the Ontario Superior Court, which is scheduled for a hearing in October.
The claim specifically focuses on NSF fees charged by CIBC on failed repeated pre-authorized debit transactions between Sept. 21, 2020, and May 31, 2024, which the class action alleges violate consumer protection laws.
Details of the lawsuit settlement were made public Thursday in a joint statement by CIBC and Koskie Minsky LLP, the law firm that originally brought forward the class action against the bank in September 2022.
The proposed settlement agreement was reached on June 24, 2026, according to the statement, and after negotiating with the assistance of a mediator.
CIBC has not admitted to and denies any liability, according to the statement, and if the settlement is approved, the bank agreed to directly deposit funds into the bank accounts of eligible customers, known as “class members” in the lawsuit.
Those customers may have been charged NSF fees more than they should have been if the same pre-authorized payment or cheque failed more than once due to a lack of funds.
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For example, if a subscription service charges a customer automatically, but that customer’s bank account is at zero dollars, then they may be charged an NSF fee by the bank. If the same service makes another attempt to charge the customer for the same payment, CIBC may have charged another NSF fee for each additional attempt.
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The class action claims that while CIBC was within its rights to charge NSF fees for payments when customers have insufficient funds, doing so multiple times for the same payment violated the terms of their agreement with customers.
In one example, the class action cites a plaintiff who had a pre-authorized fee of $7.90 charged to their CIBC account in 2022 when they had insufficient funds. They were then charged a standard NSF fee of $45 by the bank.
The next day, the same $7.90 transaction was re-presented to CIBC for payment without the plaintiff knowing. CIBC rejected the transaction again, and charged the plaintiff a second $45 NSF fee.
In this example, the plaintiff was charged NSF fees totalling $90 for a single $7.90 charge.
Although the class action notes how CIBC’s contract with customers in the given period clearly disclosed that it may charge the $45 NSF fee if pre-authorized payments were attempted when there was an insufficient balance in the account, charging for each attempt as a separate fee allegedly violated the terms of the contract.
The class action says CIBC had no right to charge plaintiffs like this more than once for a single transaction — even if the first attempt failed.
By charging customers multiple times for what is considered a single payment, the class action alleges CIBC was able to enrich itself by tens of millions of dollars a year, and the majority of these fees negatively impacted lower-income Canadians.
“The burden of these duplicative NSF Fees falls disproportionately on low-income Canadians, who are more likely to maintain low bank account balances and more likely to use online vendors in lieu of credit cards,” the class action says.
“As a result of its unlawful practice, CIBC has profited enormously, accruing tens of millions of dollars per year by charging illegitimate fees to Class Members.”
Earlier this year, the federal government enacted new rules on NSF fees, including a $10 cap on each fee, which was previously as much as $50 each.
At the same time, the federal government also banned charging multiple NSF fees on one transaction from the same account within two days, effectively creating a “cooling-off” period. It also banned charging NSF fees when an account shortfall is under $10.
If the settlement is approved in October, consumers who were affected will be automatically included as class members unless they opt out.
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