Bank Hapoalim Agrees to $1.8 Million Settlement in Class Action Over Deposit Interest Rates

Bank Hapoalim has agreed to pay NIS 6.7 million (approximately $1.8 million) to settle a class-action lawsuit concerning interest rate adjustments on deposits after partial withdrawals. The settlement request was filed with the Tel Aviv District Court in late June, following the initial lawsuit filed in November 2022.

The plaintiffs alleged that when a customer made a partial withdrawal from a variable-interest deposit linked to the prime interest rate, the bank reduced the interest rate on the remaining balance by altering the spread over the prime rate. They claimed this was done unlawfully and without adequate disclosure to customers.

Bank Hapoalim denied the allegations, asserting that the interest rate adjustment mechanism was part of the contractual agreements with customers and that relevant information was provided. The settlement covers customers who made partial withdrawals from daily interest or variable-interest deposits linked to the prime rate between November 2017 and November 2022, and whose deposit interest rate was subsequently reduced.

Under the agreement, eligible customers will receive a refund calculated from the interest they were deprived of. For prime-linked deposits, the refund will be 37.7% of the saved interest amount. For active account holders, the compensation will be directly deposited within 60 days of the settlement's final approval. For inactive accounts, the bank will attempt to locate the customers.

In addition to the retroactive compensation, the bank committed to future changes. Customers making partial withdrawals from daily interest deposits will need to actively confirm changes to the interest terms, and the bank will provide clearer disclosures regarding the new interest rate applicable to the remaining balance. This aims to reduce the likelihood of customers making withdrawals without understanding the impact on their future returns.