Last Updated On 15 July 2026, 6:34 PM EDT (Toronto Time)
A major class action settlement involving one of Canada’s largest banks is now putting real money back into the hands of thousands of everyday customers.
Scotiabank has agreed to pay $10.45 million to resolve a lawsuit that accused the bank of charging unfair non-sufficient funds fees on certain accounts.
The case centred on a practice that many Canadian banking customers may not have even noticed was happening to their accounts over a span of nearly four years.
An estimated 148,000 Scotiabank customers across the country are affected by this settlement and may soon see a deposit appear in their accounts.
The resolution comes at a time when Canadian banks are facing unprecedented scrutiny over the fees they charge their most financially vulnerable customers.
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What the Scotiabank NSF Settlement Is About
The lawsuit, formally titled Canaan Alexander v. The Bank of Nova Scotia, targeted a specific fee practice involving pre-authorized debit transactions between June 21, 2020, and April 30, 2024.
Scotiabank charged a $48 non-sufficient funds fee whenever a customer’s account did not have enough money to cover a pre-authorized debit payment.
The problem arose when the same merchant re-presented the identical pre-authorized debit within two to thirty days of the original failed transaction.
Scotiabank then charged a second $48 NSF fee for what was essentially the same payment attempt from the same company for the same dollar amount.
The class action argued that this second charge was duplicative because customers had no control over whether a merchant would re-submit the same payment.
Many customers were unaware that a single missed payment on a subscription, gym membership, or insurance premium could trigger $96 in combined bank fees within a matter of weeks.
Koskie Minsky LLP, a Toronto-based law firm, was appointed as class counsel and led negotiations on behalf of the affected customers across Canada.
How the Class Action Unfolded
The proposed settlement agreement was reached on January 21, 2026, following lengthy negotiations between the parties and with the assistance of a mediator.
The Ontario Superior Court of Justice had previously certified the case as a class action on April 8, 2024, giving the lawsuit formal legal standing.
Justice Akbarali was assigned to case-manage the action and oversaw the settlement approval process from certification through to the final hearing.
The court held the settlement approval hearing on June 12, 2026, and the settlement has since been approved, joining similar resolved cases against TD Bank and RBC.
Scotiabank has not admitted any wrongdoing or liability and continues to deny the allegations raised in the class action lawsuit.
How To Claim Your Scotiabank Settlement Payment
Eligible customers do not need to submit a claim, fill out any forms, or take any further action to receive their share of the settlement.
Scotiabank will automatically deposit an average payment of approximately $42.82 into the accounts of eligible class members.
The average payment of approximately $42.82 reflects the court-approved pro rata distribution of the net settlement fund.
Eligible customers will receive the payment automatically once the approved distribution is processed, alongside their regular banking transactions.
There is no deadline for customers to meet and no registration portal to visit because Scotiabank is handling the entire distribution process internally.
Who Qualifies for the Payment
Not every Scotiabank customer will receive a deposit, as the settlement covers only those who meet all four of the following eligibility criteria.
First, the customer must currently hold an open Scotiabank personal deposit account that is capable of receiving the settlement payment.
Second, the customer must have been charged a $48 NSF fee between June 21, 2020, and April 30, 2024, on a pre-authorized debit transaction.
Third, the same merchant must have re-presented the same pre-authorized debit within two to thirty days, triggering a second $48 NSF fee.
Fourth, the customer must not have already been reimbursed by Scotiabank for the relevant duplicative fee at any point before the settlement.
Scotiabank will use its own internal records to identify all qualifying customers, so there is no need to contact the bank or gather documentation.
How Canadian Bank NSF Settlements Compare
Scotiabank is not the only major Canadian bank to face a class action over duplicative NSF fees in recent years.
Koskie Minsky LLP has pursued similar lawsuits against all of Canada’s Big Five banks, and four have now reached settlement agreements.
The following table compares the key details of each resolved or proposed settlement as of July 2026.
| Bank | Settlement | Period | Per Customer | Status |
| TD Bank | $15.9 million | Feb 2019 – Nov 2023 | ~$88 | Approved |
| Scotiabank | $10.45 million | Jun 2020 – Apr 2024 | ~$42.82 | Approved |
| RBC | $7.05 million | Aug 2020 – Aug 2022 | Pro rata (TBD) | Approved |
| CIBC | $10 million | Sep 2020 – May 2024 | TBD | Pending (Oct 19) |
| BMO | TBD | TBD | TBD | Ongoing |
TD Bank paid the largest total settlement at $15.9 million and offered the highest per-customer amount at approximately $88 per eligible account holder.
CIBC announced its own $10 million proposed settlement on June 24, 2026, with a court approval hearing scheduled for October 19, 2026.
The Bank of Montreal is the only remaining Big Five bank with an unresolved class action over duplicative NSF fees still working through the courts.
What Changed in Canadian Banking After These Lawsuits
The wave of NSF fee class actions helped accelerate a major federal policy change that took effect on March 12, 2026, through new regulations announced by the federal government.
Federal Finance Minister François-Philippe Champagne introduced a hard cap limiting NSF fees to a maximum of $10 per occurrence for personal deposit accounts.
Before the cap, Canada’s major banks charged between $45 and $48 per NSF transaction, meaning even a small account shortfall could trigger a significant penalty.
The new rules also prohibit banks from charging more than one NSF fee within a two-business-day period on the same personal deposit account.
Banks cannot charge any NSF fee at all when the overdraft amount on a personal account is less than $10, as confirmed by the Financial Consumer Agency of Canada.
The federal government estimates these combined protections will save Canadian consumers more than $600 million annually in reduced banking fees.
Roughly 34% of Canadians pay at least one NSF fee in any given year, representing approximately 15.8 million NSF transactions recorded in 2023 alone.
The Financial Consumer Agency of Canada is now responsible for overseeing bank compliance with the new NSF fee requirements and investigating consumer complaints.
What This Means for Scotiabank Customers Going Forward
Customers who believe they were charged a duplicative NSF fee after April 30, 2024, are not covered by this settlement but may benefit from the new $10 cap now in effect.
Anyone who believes their bank charged an NSF fee above $10 after March 12, 2026, should first use the bank’s formal complaint process.
Consumers can also report potential regulatory violations to the Financial Consumer Agency of Canada.
Setting up balance alerts through Scotiabank’s mobile app or online banking is one of the most effective ways to avoid NSF charges entirely going forward.
Customers can also consider linking a savings account or arranging overdraft protection to cover small shortfalls before they trigger any banking fees.
For those expecting CRA benefit payments or other government deposits, ensuring your direct deposit details are current helps prevent missed payments that could lead to insufficient funds.
The broader picture is that Canadian consumer protection in banking has shifted dramatically in the past two years, and customers now have significantly more legal safeguards than before.
Frequently Asked Questions (FAQs)
Will the Scotiabank settlement payment count as taxable income on my Canadian tax return?
Because this payment represents compensation connected to previously charged banking fees, it may generally be treated differently from ordinary employment or investment income. However, individual tax treatment can vary, so customers with concerns should consult a tax professional.
Can former Scotiabank customers who closed their accounts still receive the settlement payment?
The settlement specifies that recipients must currently hold an open Scotiabank personal deposit account capable of receiving the payment. Customers who closed their accounts before the distribution date are not eligible for the automatic deposit under the terms of this particular settlement. This differs from the TD Bank settlement, which included both current and former account holders in its class definition. Former Scotiabank customers who were charged duplicative NSF fees during the eligibility period may wish to contact Koskie Minsky LLP directly at scotiabankclassaction@kmlaw.ca for guidance on their specific situation.
What happens to the portion of the $10.45 million settlement that does not go directly to customers?
Class action settlements in Canada typically allocate portions of the total amount toward court-approved legal fees for class counsel, administration expenses, disbursements, applicable taxes, and a small honorarium for the lead plaintiff. The exact breakdown is determined by the court during the settlement approval process. The approximately $42.82 per-customer figure already accounts for these deductions, representing the net amount distributed after all approved costs have been subtracted from the gross settlement fund.
Could Scotiabank customers who opted out of the class action still file an individual lawsuit over duplicative NSF fees?
Class members who formally opted out of the settlement before the court-imposed deadline preserved their right to pursue independent legal action against Scotiabank. Opting out means they are not bound by the settlement terms and will not receive the automatic $42.82 payment, but they retain the ability to file their own claim. Pursuing an individual lawsuit would require hiring a lawyer, covering legal costs independently, and proving damages on a case-by-case basis. Given the new $10 NSF fee cap and the relatively small per-customer amount at stake, most legal professionals would advise that a class settlement offers better practical value for the typical affected consumer.
Are credit union customers in Canada also protected from duplicative NSF fees under the new federal rules?
The $10 NSF fee cap applies to all federally regulated financial institutions, which includes Schedule I, II, and III banks as well as federal credit unions. However, many credit unions across provinces like British Columbia, Quebec, and Ontario are provincially regulated rather than federally regulated, and they are not automatically subject to the federal cap. Some provincial credit unions have voluntarily adopted the $10 limit, but customers should confirm their credit union’s regulatory status directly. The caps apply only to personal and joint accounts, meaning business and corporate accounts at any institution remain outside the scope of these protections.
Fact-Checked: Settlement amount of $10.45 million, eligibility period of June 21, 2020 to April 30, 2024, and court hearing date of June 12, 2026 verified against the official Koskie Minsky LLP case page (kmlaw.ca) and the Yahoo Finance press release dated March 3, 2026. NSF fee cap of $10 and effective date of March 12, 2026 verified against the Department of Finance Canada and FCAC announcements on canada.ca.
Disclaimer: This article is for informational purposes only and does not constitute legal or financial advice. Scotiabank has not admitted liability. For advice about your eligibility, tax treatment or legal rights, consult a qualified lawyer, accountant or tax professional.
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