For years, consumer advocates have fought the practice by banks of clearing the largest check or debit first on any given day, arguing that it simply raises the chances of collecting more overdraft fees.

They are getting more traction.

Webster Bank, one of Connecticut largest banks, will pay $2.8 million to settle a class-action lawsuit alleging the Waterbury-based bank used the practice in hopes of collecting more overdraft fees. Penalty fees have become a crucial component of fee income for many banks as they struggle through difficult economic times.

The settlement, disclosed in a regulatory filing, comes after a landmark ruling in August in which a federal court required Wells Fargo & Co. to repay $203 million in overdraft fees reaped because the bank, which owns the Wachovia name in Connecticut, cleared the largest checks first on a given day in a consumer account.

Bankers have defended the practice, noting that many customers want the larger checks or debits to be paid first. Those are typically the most important, including the monthly mortgage or rent payment, and would have the biggest consequences if there was an overdraft.

The Webster settlement comes after a lawsuit filed in Connecticut in April and will also resolve a similar suit against Webster in New York.

Webster continued to maintain in the filing that its practices were both "proper and lawful." The settlement seeks to "finally resolve the litigation, and avoid any further expense and distraction occasioned by the litigation," the filing said.

Webster declined further comment Thursday.

Robert Izard, the lawyer who filed the Connecticut lawsuit, said that Webster now clears checks in the order they are received. The proceeds from the settlement will be distributed to Webster customers, Izard said.



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