A Pennsylvania woman has filed a credit union overdraft lawsuit against Philadelphia Federal Credit Union.

The complainant Aliesha D.—a resident of Upper Darby—alleges in her credit union overdraft lawsuit that PFCU engaged in a breach of contract by charging multiple overdraft or non-sufficient fund fees on single transactions.

According to the credit union overdraft lawsuit, account-holder contract documents with PFCU plainly state one of two authorized actions the institution can take in response to debits, ATM withdrawals, and ACH charges that exceed the account balance. The first action is to reject the payment and pass a one-time $28 NSF fee on to the credit union customer. The second action is to approve payment and pass a one-time $28 overdraft fee on to the customer.

Aliesha indicates that PFCU regularly issues multiple NSF and OD fees on the same transaction without consulting with the patron. She alleges PFCU presents the charge multiple times and, although the documentation says this would be a single item, passes on multiple fees for the same charge. The contract purportedly fails to disclose the intent to do abusively levy fees by treating each presentation as a new “item” and mislead the plaintiff and others like her into believing this would not be done.

Unfair and Abusive Practices in Modern Banking

Presenting the same transaction for “re-processing” several times is just one of the many modern banking practices being questioned. While the practice seems abusive, many financial institutions do not hide their intent to do reprocess and charge multiple fees on a single item, but give fair warning in with customer account disclosure paperwork. In an age of electronic material, often these disclosures are given “fast and furiously.” Patrons are asked to sign off on an electronic board quickly, potentially missing this important disclosure.

According to My Bank Tracker.com, other costly practices designed to enrich banks at the expense of the customer base include charging more than one overdraft fee or NSF fee in a given day and reordering transactions. In the first case, charging several fees in a day can put you so far in a hole, that you have difficulty pulling yourself out. Doing so, you draw from funds needed in a current pay period to live adding to a vicious cycle.

In the second case, financial institutions may reorder transactions according to the largest amount rather than chronologically. This is a quick pathway to putting an account in the red and gathering fees from customers.

Limiting Damage by Choosing not to “Opt-in”

According to Nerd Wallet.com, saying yes or “opting in” to overdraft protection plans associated with credit unions and banks isn’t a smart financial move. As part of the onboarding process with a new financial institution, you are likely to be presented with all the benefits of doing so and receive a lot of pressure. This is because of a 2010 law that made it a requirement of banks to seek consent regarding the inclusion of one-time debit card charges and ATM withdrawals into overdraft coverage.

With overdraft coverage, the bank is allowed to charge a fee for covering these transactions. Without coverage or not “opting in”, at least ATM withdrawals and one-time debit card charges are declined at the register or machine without any cost save a little humiliation. Recurring ACH charges aren’t declined so easily, but these can easily be taken care of by establishing a line of credit with your checking account or linking a savings account to it.

If you were charged overdraft fees or NSF fees by your bank or credit union that you believe are improper for any reason, the attorneys who work with Top Class Actions are ready to investigate these fees on your behalf.

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This article is not legal advice. It is presented
for informational purposes only.