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

Bank Hapoalim has agreed to pay approximately 6.7 million shekels (about $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-rate 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. The plaintiffs 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 bank's position was that the interest rate update was a contractual term.

The settlement applies to customers who made partial withdrawals from daily interest or variable-rate prime-linked deposits between November 2017 and November 2022, and whose deposit interest rates were subsequently reduced. Eligible customers will receive compensation calculated from the lost interest. For prime deposits, the refund will be 37.7% of the saved interest, and for other prime-based deposits, the calculation will be similar. Customers with active accounts will receive the compensation directly within 60 days of the settlement's final court approval. The bank will attempt to locate customers with inactive accounts.

In addition to the back payments, the bank committed to procedural changes for the future. When a customer makes a partial withdrawal from a daily interest deposit, they will need to actively confirm the change in interest terms. The bank will also provide clearer disclosures regarding the new interest rate applicable to the remaining deposit balance. This aims to reduce the likelihood of customers making partial withdrawals without fully understanding the impact on their future returns.