Banks or credit unions like Star One Credit Union may be charging their customers high or unfair overdraft fees using deceptive tactics.

Indeed, certain financial institutions even sign customers up involuntarily for overdraft protection programs that place them at risk of incurring unexpected charges.

A number of banks and credit unions, including Star One Credit Union based in Sunnyvale, California, are being investigated for possible deceptive practices used in charging overdraft fees.

What is Overdraft Protection?

Overdraft protection is advertised as a program that will save customers from overdrawing their bank accounts, ultimately saving them money.

In order to do this, banks charge an overdraft fee when a customer overdraws their account, covering the transaction that is required to move money and cover the payment.

Overdraft protection is a term that sounds wholly beneficial for its customers, since overdrawing an account can be stressful, but banks have been reported to sign customers up for these programs without providing all the pertinent information about these programs.

While some banks may be signing up customers involuntarily or automatically for these programs, the law regarding such practices requires that institutions like Star One Credit Union allow customers to opt in or out of these programs voluntarily.

Credit unions like Star One Credit Union stand to benefit greatly from engaging in these deceptive overdraft practices. Financial institutions rake in billions of dollars each year from overdraft fees alone, according to reports.

Star One Credit Union and a number of other prominent banks and credit unions are being investigated for allegedly failing to fully explain the details of their overdraft protection programs, deliberately altering fee processing to incur the highest fees from their customers, or purposely misrepresenting the benefits of such a program.

Indeed, failing to fully understand how overdraft programs work can leave customers in the lurch, and can benefit banks that want to take advantage of their customers.

According to some disappointed customers, banks use a variety of unfair overdraft practices to maximize how much they can charge in overdraft fees.

Some banks may deliberately reorder their customers’ transactions from largest to smallest rather than in natural, chronological order so that each subsequent transaction is more likely to overdraw the account.

Unfortunately, unfair overdraft fees can affect the Americans who can least afford it. Bank customers who routinely have less money available in their accounts are naturally more likely to overdraw accounts, and cannot afford extra overdraft fees attached to their accounts.

For many Americans, being routinely hit with excessive overdraft fees can make already difficult financial situations even harder.

If you have been subjected to unfair overdraft fee practices by Star One Credit Union or another financial institution, you may be able to join a class action overdraft fees lawsuit.

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