Attorneys have launched an overdraft fee class action lawsuit investigation to explore overdraft fee violations at credit unions.

The investigation is looking into allegations that credit union overdraft fees may be exorbitant and run afoul of government regulations.

Historically, credit unions have boasted lower fees and better interest rates than traditional banks. However, during the economic downturn of the 2000s, the overdraft fees and other costs associated with credit unions began to creep upwards.

Several prominent credit unions have vastly different fee structures. For example, Pentagon Federal Credit Union does not offer overdraft protection. In the event of an overdraft, a non-sufficient funds fee of thirty dollars is charged.

Meanwhile, at State Employee Federal Credit Union, there is an overdraft fee of fifty cents, which only kicks in after the first day the account is overdrawn. However, under some circumstances, an overdraft can trigger a non-sufficient funds fee of twelve dollars.

At Boeing Employees Credit Union, automatic overdraft protection is offered on checks, ACH payments, online bill pay, and debit card purchases. However, if a consumer doesn’t opt for the overdraft service and overdraws an account, they may face a non-sufficient funds fee of $25 dollars per transaction.

In 2010 the Consumer Financial Protection Bureau, or CFPB, released a report on credit union overdraft fee practices that raised concerns about the way credit unions handled overdraft fees. The CFPB also touched on the marketing practices for overdraft protection and the way that overdraft fees are assigned.

The CFPB report noted that in many cases, customers who opt in to overdraft protection programs may wind up paying more in fees than customers who did not.

In other cases, the CFPB report noted, people might not have been able to anticipate that they were in danger of overdraft fees because of the order their bank or credit union processed their deposits and withdrawals in.

The CFPB report stated that customers who did not opt in to overdraft protection programs on average saved four-hundred and fifty dollars.

The report also said that customers who opted in to overdraft protection were more likely to end up with involuntary account closures at many banks and credit unions. In fact, some banks and credit unions had as many as 2.5 times more involuntary account closures for customers who opted into overdraft protection programs.

The report did not determine cause-and-effect, however, and it is possible that customers more likely to overdraw in the first place may have been more likely to try overdraft protection.

In general, the CFPB’s investigators found that various credit unions and banks varied wildly in terms of overdraft fees and practices. A credit union overdraft fees lawsuit could create legal precedents that require credit unions to change overdraft fee practices.

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