The overdraft protection policies and fees at America First Credit Union are now getting a closer look from consumer advocates.

What Is Overdraft Protection?

Overdraft protection developed as an alternative to suffering the consequences of a bounced check.

By default, banks and credit unions would historically decline to pay transactions presented that would overdraw a person’s checking account – such as a check written for an amount in excess of available funds. Payments rejected for non-sufficient funds are sometimes known as NSF items or returned items.

With overdraft protection, the financial institution pays the transaction instead of denying it. The payment may come in the form of funds transferred from a linked savings account, or it may be debited to a customer’s line of credit.

Transactions paid through overdraft protection typically incur a fee. These overdraft fees are often comparable to the fees associated with NSF transactions. However, since overdraft protection allows the transaction to be paid, the customer can avoid the extended consequences of NSF transactions such as the fees merchants assess for denied payments.

Since the financial crisis, many financial institutions have looked to overdraft fees as a way to increase revenue. Some have been caught manipulating their overdraft fee policies in a way that maximizes the amount of fees a customer will pay.

Tactics like these have led to overdraft fee class action lawsuits, resulting in multi-million dollar settlements with some of the largest banks in the U.S.

A Closer Look at America First Credit Union

Class action attorneys are currently investigating the overdraft fee practices at several financial institutions to ensure they comply with the latest federal and state requirements.

Among the institutions under investigation is America First Credit Union. As of December 2015, this Utah-based credit union served over 736,000 members through over 100 full-service branch locations. It boasts assets of $7.1 billion.

According to the credit union’s website, checking accounts at America First Credit Union come with overdraft service by default. With this service, the credit union may pay transactions that would otherwise overdraw the account. By paying the transaction, the credit union allows the customer’s account to go into a negative balance.

If any such transaction exhausts both the checking account and any associated line of credit, America First Credit Union charges an overdraft fee of $25, the same amount it charges for a returned item such as a bounced check.

This service is discretionary, not guaranteed. The credit union notes that it may choose not to pay any particular overdraft, even if it has paid similar transactions in the past.

This overdraft service applies to checks, ACH debits, and certain other payments. It does not automatically apply to debit card transactions, but customers have the option of authorizing America First Credit Union to extend overdraft protection to their debit card transactions.

Consumer advocates are interested in speaking with customers of America First Credit Union who believe they have been subject to overdraft policies that may be unfair or possibly unlawful. Those who qualify may be eligible to participate in this investigation and receive a legal consultation free of charge.

ATTORNEY ADVERTISING

The choice of a lawyer is an important decision and should not be based solely on advertisements.