The Canadian Imperial Bank of Commerce has agreed to pay $10 million to settle a class action lawsuit over how the lender charges depositors who attempt to make payments without sufficient funds in their accounts.
Settlement Details and Hearing Date
The proposed settlement was announced on Thursday by both CIBC and Toronto-based law firm Koskie Minsky LLP. A hearing to approve the agreement is expected to take place on Oct. 19. If approved, CIBC will deposit the funds directly into the bank accounts of eligible class members. The bank has agreed to pay but has not admitted liability and denies liability, according to a statement on Thursday.
Background of the Class Action
The allegation against CIBC is that the bank charged multiple Non-Sufficient Funds (NSF) fees on a single rejected payment or bounced cheque. This practice was challenged in a court document filed in 2022, when legal proceedings began. The charge occurs when a depositor makes a payment or issues a cheque without sufficient funds. The first and only lawful charge is applied when the payee attempts to collect and CIBC rejects the payment. However, when subsequent attempts are made by the payee to process the same rejected payment or cheque, CIBC charged a duplicative NSF fee each time. The document stated that the burden of these duplicative fees falls disproportionately on low-income Canadians, who are more likely to maintain low bank account balances.
Similar Settlements with Other Banks
Similar settlements have been reached with other major Canadian banks. Scotiabank agreed to pay $10.45 million in March, RBC agreed to pay $7.05 million in 2025, and TD agreed to pay $15.9 million in 2023. The class action against CIBC covers charges between Sept. 21, 2020 and May 31, 2024. The class action was certified by the Ontario Superior Court of Justice on June 3, 2024.
Federal Government Fee Cap
In March, the Government of Canada announced a $10 cap on NSF fees, down from as high as $50. The government stated that with over one out of three Canadians incurring an NSF fee annually, this measure addresses a significant financial burden that disproportionately affects those living paycheque to paycheque. The cap also ensures consumers will not be charged an NSF fee more than once within a period of two business days for the same deposit account, and no NSF fee may be charged when the overdraft amount is less than $10. The federal government expects the cap to save Canadians more than $600 million.
