Morton Community Bank $238,000 Settlement, Illinois Customers Charged Illegal Overdraft Fees May Get Paid Automatically

Morton Community Bank has agreed to pay $238,000 to settle a class action lawsuit that accused the Illinois-based bank of illegally charging customers overdraft and nonsufficient funds fees more than once on the very same transaction. The lawsuit claimed this practice violated the account agreement and Illinois law, including breach of contract, breach of the implied covenant of good faith and fair dealing, unjust enrichment, and the Illinois Consumer Fraud and Deceptive Business Practices Act. 

The good news for eligible customers: you do not need to do anything to receive your payment. The bank will send it to you automatically — but only if the address they have on file for you is current.

Quick Facts

• Case name: Williams et al. v. Morton Community Bank | Case No. 2024-LA-000026
• Settlement amount: $238,000
• Who qualifies: Illinois residents who had a personal checking account with Morton Community Bank and were charged retry overdraft or NSF fees between April 11, 2014 and August 31, 2022
• No claim form required: Payments are automatic — but update your address if it has changed
• Current customers: Receive a direct account credit
• Former customers: Receive a check mailed to their last known address
• Opt-out deadline: April 9, 2026
• Fairness hearing: June 10, 2026
• Official settlement website: williamsoverdraftsettlement.com
• Settlement administrator phone: 1-888-235-3719

Most people never think twice about an overdraft fee. You dip below zero, the bank charges you $35, you move on. But what happens when the bank charges you that fee twice — or even three times — on the exact same transaction you already paid a fee for? That is exactly what this lawsuit is about. And if it happened to your Morton Community Bank checking account any time between 2014 and 2022, money may be coming your way without you having to lift a finger.

What Did Morton Community Bank Actually Do?

To understand this lawsuit, you need to understand how a specific type of bank fee works — one that most customers never even realize is happening to them.

Here is how it typically plays out. You try to make a payment — maybe a utility bill set up on autopay, or a check you wrote to a vendor. Your account does not have enough money to cover it. The payment bounces. The bank charges you a nonsufficient funds fee, commonly called an NSF fee. So far, that is standard banking practice and generally legal.

But here is where Morton Community Bank’s alleged conduct crossed a line.

A “retry fee” is defined as a fee Morton Community Bank charged on an item that a merchant returned for insufficient funds — so it assessed an NSF fee — the merchant then re-presented the same item, and the bank assessed an additional NSF fee or overdraft fee on that same transaction.

In other words, the merchant tried the payment again — something merchants do routinely without telling the customer — and the bank charged the customer a brand new fee for the same original payment that had already bounced once. Some customers were hit with this double or triple fee cycle multiple times on a single transaction, racking up charges of $70, $105, or more on something that was originally one bounced payment.

Morton Community Bank denied wrongdoing but agreed to settle to avoid the expense and uncertainty of litigation.

Are You Eligible for a Payment?

This settlement covers a specific and clearly defined group of people. You qualify if all three of the following apply to you:

1. You are an Illinois resident. The settlement is limited to Illinois citizens only — not customers in other states where Morton Community Bank operates.

2. You have or had a personal checking account with Morton Community Bank. Business accounts are not covered. This settlement applies only to personal checking accounts.

3. Morton Community Bank charged you one or more retry fees between April 11, 2014 and August 31, 2022. A retry fee, as defined above, is a second or subsequent NSF or overdraft fee charged when a merchant re-presented the same payment after it already bounced and was already hit with a fee.

If you received a notice from Morton Community Bank regarding this settlement, its records indicate you are likely a class member. If you received a notice in the mail — even if you set it aside — that notice is confirmation that the bank’s own records show you were charged retry fees during the covered period.

Did not receive a notice but think you qualify? Contact the settlement administrator directly at 1-888-235-3719 or visit williamsoverdraftsettlement.com to check your eligibility.

How Much Will You Receive?

The payment calculation for this settlement is more precise than most. Rather than simply splitting the fund equally among all class members, the settlement administrator will divide the net settlement fund by the total number of retry fees all class members paid, resulting in a per-fee amount. It will then multiply the number of retry fees each individual class member paid by that per-fee amount to determine their specific payment.

This means the more retry fees you were charged during the covered period, the larger your payment will be. A customer who was hit with retry fees on ten separate occasions will receive more than someone who was charged once.

Here is how the $238,000 fund breaks down before payments reach class members:

• Settlement administration costs: $38,702 estimated
• Attorneys’ fees: Up to $79,333
• Attorneys’ expenses: To be determined by the court
• Service award to class representative: Up to $5,000
• Payments to eligible class members: The remainder of the fund

After those deductions, the net amount available for class members will be roughly $115,000 to $120,000 depending on final court-approved expenses. Given the number of customers likely affected over an eight-year period, individual payments will be modest — but they represent money you were charged improperly and are legally owed back.

One additional detail worth noting: if any funds remain due to uncashed checks after 120 days, the settlement administrator may issue a second distribution if the average amount per class member exceeds $5. Otherwise, remaining funds will be donated to Land of Lincoln Legal Aid.

You Do Not Need to File a Claim — But Read This Carefully

This is the part most people miss, and it could mean the difference between receiving your payment and losing it entirely.

Class members do not need to submit a claim form or take any action to receive their payment or account credit. The settlement administrator will automatically issue payments based on Morton Community Bank’s records.

However, there is one critical step some people must take: updating your address.

Current account holders will receive a credit directly to their account. Former account holders will receive a check mailed to their last known address.

This settlement covers transactions going back to April 2014 — over a decade ago. If you closed your Morton Community Bank account years ago and have since moved, the check will go to whatever address the bank has on file for you. If that is an old address, your payment will end up somewhere you no longer live.

If your address has changed since you held a Morton Community Bank account, contact the settlement administrator immediately:

• Online: Visit williamsoverdraftsettlement.com to update your address
• By mail: Williams v. Morton Community Bank, c/o Settlement Administrator, P.O. Box 301130, Los Angeles, CA 90030-1130
• By phone: 1-888-235-3719

Do this as soon as possible — do not wait until close to the fairness hearing date.

When Will Payments Go Out?

The settlement administrator will distribute payments within 70 days after the court resolves any appeals and grants final approval to the settlement.

The fairness hearing — where a judge decides whether to grant that final approval — is scheduled for June 10, 2026. Assuming no significant objections or appeals follow, payments could realistically begin going out by late August or September 2026 for current account holders receiving credits, and around the same time for former customers receiving checks.

Your Other Options: Opting Out or Objecting

Most eligible customers will want to simply receive their automatic payment and move on. But you do have two other options worth understanding before the deadlines pass.

Opting Out — Deadline: April 9, 2026 If you believe your individual damages from improper retry fees are significantly higher than what this settlement will pay — and you want to preserve your right to sue Morton Community Bank on your own — you can exclude yourself from the settlement by submitting a written opt-out request before April 9, 2026. Once you opt out, you will not receive any payment from this settlement, but your individual legal rights remain intact.

Objecting to the Settlement If you believe the terms of this settlement are unfair — for example, that $238,000 is insufficient compensation for the scale of the alleged fee abuse — you have the right to file a written objection with the court before the fairness hearing on June 10, 2026. Instructions for doing so are available at williamsoverdraftsettlement.com.

If you are considering opting out or objecting, speaking with a consumer rights attorney first is worth the time. Many offer free initial consultations and can help you assess whether your individual situation warrants pursuing a separate claim.

Why Banks Keep Getting Sued Over Overdraft Fees

The Morton Community Bank case is not unique. Overdraft and NSF fee abuse has been one of the most common sources of consumer banking litigation in the United States over the past decade, and the practice of charging multiple fees on a single re-presented transaction is at the center of dozens of class action cases.

Morton Community Bank is a well-established Illinois community bank with around 39 locations and over $5 billion in assets. It is FDIC-insured and generally well-regarded in the communities it serves. But even well-run banks have been caught up in the retry fee litigation wave — because for years, many banks’ account agreements were written in ways that customers reasonably read as limiting overdraft fees to one per transaction, while the bank’s internal systems were set up to charge again when merchants re-presented.

The Consumer Financial Protection Bureau has repeatedly flagged this practice as deceptive. Several major national banks — including Wells Fargo, Bank of America, and TD Bank — have paid hundreds of millions in settlements over similar fee structures in recent years. The Morton Community Bank case is smaller in dollar terms, but it follows the exact same legal theory: charging a customer twice for the same bounced payment is a breach of the account agreement and a violation of Illinois consumer protection law.

If you have dealt with similar issues at other banks — whether unexpected overdraft fees, debt collection pressure related to overdrawn accounts, or aggressive collection tactics over unpaid bank fees — our guide on how to get collections removed without paying breaks down your rights and five proven strategies that actually work. And if you are a California resident dealing with debt collection related to bank fees or other consumer accounts, our detailed guide on California debt collection laws and statutes of limitations is one of the most thorough resources available on what collectors can and cannot legally do in your state.

Key Legal Terms Explained

NSF Fee (Nonsufficient Funds Fee): A fee a bank charges when a customer tries to make a payment but does not have enough money in their account to cover it. The payment is returned unpaid — commonly called a “bounced” payment.

Retry Fee: A second NSF or overdraft fee charged by a bank when a merchant re-presents the same payment after it already bounced once and a fee was already charged. This is the specific practice at the center of this lawsuit.

Overdraft Fee: A fee charged when a bank covers a payment even though the customer’s account balance is insufficient — essentially a short-term loan the bank extends to cover the transaction.

Pro Rata Distribution: A payment method where each eligible person receives a proportional share of the fund based on a specific measure — in this case, the number of retry fees each person was charged.

Breach of Contract: A legal claim that one party failed to follow the terms of an agreement. Here, plaintiffs argued that charging multiple fees on re-presented items violated the terms of Morton Community Bank’s own account agreement.

Illinois Consumer Fraud and Deceptive Business Practices Act: An Illinois state law that protects consumers from unfair, deceptive, or fraudulent business practices — including misleading fee disclosures by financial institutions.

Settlement Administrator: The neutral third party managing this settlement — Verita Global, reachable at 1-888-235-3719 or through williamsoverdraftsettlement.com.

This article is for informational purposes only and does not constitute legal advice. For questions about your specific eligibility, payment status, or legal rights, contact the settlement administrator at 1-888-235-3719 or visit williamsoverdraftsettlement.com. If you are considering opting out or objecting, please consult a qualified consumer rights attorney in your state.

Sources: Williams et al. v. Morton Community Bank, Case No. 2024-LA-000026 | Official settlement website: williamsoverdraftsettlement.com | ClaimDepot.com settlement report, March 5–8, 2026 | Class notice and settlement agreement available at williamsoverdraftsettlement.com

About the Author

Sarah Klein, JD, is a licensed attorney and legal content strategist with over 12 years of experience across civil, criminal, family, and regulatory law. At All About Lawyer, she covers a wide range of legal topics — from high-profile lawsuits and courtroom stories to state traffic laws and everyday legal questions — all with a focus on accuracy, clarity, and public understanding.
Her writing blends real legal insight with plain-English explanations, helping readers stay informed and legally aware.
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