The CIBC logo is displayed on a flag in front of its headquarters in Toronto on Oct. 25, 2021. The Canadian Press/Evan Buhler
The Canadian Imperial Bank of Commerce has agreed to a proposed $10 million settlement in a class-action lawsuit alleging it improperly charged customers repeated non-sufficient funds (NSF) fees on the same failed pre-authorized debit transactions.
CIBC announced the proposed settlement jointly with law firm Koskie Minsky LLP, which is representing lead plaintiff Sarah Louise Campbell on behalf of class members.
The class action is concerned with duplicate NSF fees charged on preauthorized debit transactions that took place between Sept. 21, 2020, and May 31, 2024. The lawsuit was certified by the Ontario Superior Court of Justice on June 3, 2024.
CIBC and law firm Koskie Minsky arrived at a proposed settlement on June 24, 2026, following negotiations with a mediator, according to a July 2 news release.
A hearing is scheduled for Oct. 19, at which time a court will decide whether to approve the proposed settlement, the release says.
“CIBC has not admitted liability and denies liability. If the settlement is approved, CIBC will directly deposit funds into the bank accounts of eligible class members,” it says.
Financial institutions generally charge NSF fees when there are insufficient funds in a customer’s account at the time a payment they preauthorized—usually through a written cheque or a preauthorized debit—is processed. When an NSF event occurs, the bank rejects and reverses the transaction. The merchant does not get paid, and the bank slaps the account holder with a fee for processing the bounced payment
In the past, when a retailer or service provider attempted to resubmit a request for a failed payment within a short time frame, the account holder would be charged another NSF fee, which could trap low-income consumers in a cycle of heavy penalties.
In the case of CIBC, NSF fees were historically set at $45 per instance, meaning two failed attempts at submitting a payment for a single transaction could result in $90 to the consumer, even when the original transaction was for just a few dollars.
On March 12, regulations introduced by the Financial Consumer Agency of Canada (FCAC) governing NSF fees came into effect. Under the new rules, NSF fees are capped at $10, and consumers cannot be charged such fees more than once in a period of two business days for the same personal deposit account. Consumers also cannot be charged an NSF fee on their personal deposit account when the balance is under $10.
“The new NSF fee regulations represent an important step forward in consumer protection. These fees disproportionately affect Canadians who are already struggling financially. The restrictions on NSF fees will bring down the costs of banking for many Canadians,” FCAC Commissioner Shereen Benzvy Miller said.
