The Canadian Imperial Bank of Commerce (CIBC) has agreed to a proposed $10-million settlement concerning non-sufficient funds (NSF) fees charged to its customers. The class-action lawsuit alleges that CIBC's practice of charging multiple NSF fees for the same failed pre-authorized debit transactions disproportionately affected low-income Canadians. The settlement, announced on July 3, 2026, is subject to approval by the Ontario Superior Court, with a hearing scheduled for October.
The lawsuit focuses on NSF fees imposed by CIBC on repeated failed pre-authorized debit transactions between September 21, 2020, and May 31, 2024. The plaintiffs argue that charging multiple NSF fees for the same transaction violates consumer protection laws. For instance, if a subscription service attempts to charge a customer automatically, and the customer's account lacks sufficient funds, CIBC may charge an NSF fee. If the same service re-presents the charge, CIBC could impose another NSF fee, leading to multiple fees for a single transaction.
The class action claims that while CIBC was within its rights to charge NSF fees when customers had insufficient funds, charging multiple fees for the same payment violated the terms of their agreement with customers. An example cited in the lawsuit involves a plaintiff who had a pre-authorized fee of $7.90 charged to their CIBC account in 2022 when they had insufficient funds. The bank then charged a standard NSF fee of $45. The next day, the same $7.90 transaction was re-presented to CIBC for payment without the plaintiff's knowledge. CIBC rejected the transaction again and charged the plaintiff a second $45 NSF fee. In this case, the plaintiff was charged a total of $90 in NSF fees for a single $7.90 charge.
The class action asserts that CIBC had no right to charge plaintiffs 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 lawsuit alleges that CIBC was able to enrich itself by tens of millions of dollars annually, with the majority of these fees negatively impacting lower-income Canadians. The lawsuit states, "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." It further claims that CIBC profited enormously 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. The new regulations also banned charging multiple NSF fees on one transaction from the same account within two days, effectively creating a "cooling-off" period. Additionally, the government prohibited 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. Eligible customers will receive direct deposits into their bank accounts. CIBC has not admitted to and denies any liability in this matter.
This proposed settlement follows a series of class-action lawsuits against Canadian banks over similar issues. For example, in January 2023, CIBC agreed to pay $153 million to settle a class-action lawsuit over its overtime policies. Similarly, in December 2025, TD Bank agreed to a $70 million settlement in a class-action lawsuit concerning alleged unfair fees or commissions for handling investments.
The outcome of this proposed settlement could have significant implications for banking practices in Canada, particularly concerning the transparency and fairness of fee structures. Consumers are encouraged to stay informed about the developments of this case and to review their banking agreements to understand the fees they may be subject to.
As the financial industry continues to evolve, it is crucial for consumers to be aware of their rights and to advocate for fair practices within the banking sector.
The proposed settlement also highlights the importance of regulatory oversight in ensuring that financial institutions adhere to consumer protection laws and maintain transparent fee structures. The government's recent enactment of new rules on NSF fees reflects a growing recognition of the need to protect consumers from potentially exploitative banking practices.
In conclusion, the proposed $10-million settlement between CIBC and the plaintiffs in this class-action lawsuit represents a significant development in the ongoing efforts to address and rectify unfair banking fees in Canada. If approved, it could set a precedent for future cases and prompt further reforms aimed at enhancing consumer protection in the financial sector.
Consumers affected by this issue should monitor the progress of the settlement approval process and consider seeking legal advice to understand their rights and options fully.
The case underscores the necessity for consumers to remain vigilant and proactive in safeguarding their financial interests, especially in the face of complex banking fee structures.
As the financial landscape continues to change, ongoing dialogue between consumers, financial institutions, and regulators will be essential in fostering a more equitable and transparent banking environment in Canada.
This case also serves as a reminder of the power of collective action in addressing systemic issues within the financial industry. Class-action lawsuits provide a mechanism for individuals to challenge practices that may be detrimental to a broader group, thereby promoting fairness and accountability.
In the aftermath of this proposed settlement, it will be important to observe how other financial institutions respond and whether similar practices are prevalent across the industry. The outcome could influence future regulatory measures and shape the evolution of banking practices in Canada.
Ultimately, the resolution of this case could lead to a more consumer-friendly banking environment, where transparency and fairness are prioritized, and where consumers can have greater confidence in the financial services they utilize.
As the situation develops, stakeholders across the financial sector should remain engaged and committed to upholding these principles.