Digital Federal Credit Union consumers may be able to file a credit union overdraft lawsuit over the bank’s overdraft practices.

When a transaction exceeds the amount of money in a checking account, the transaction is usually denied. However, when a consumer has overdraft protection through their bank or credit union, these transactions are able to go through with a fee.

Instead of allowing the account to go negative, overdraft protection transfers money from a savings account or line of credit to cover the transaction. Overdraft protection fees charged for this service act as a convenience fee that aims to compensate banks for the “hassle” of transferring money.

Although charging overdraft fees is not illegal, some banks such as Digital Federal Credit Union face legal action due from consumers claiming that the financial institutions use overdraft protection and its fees to take advantage of consumers.

Digital Federal Credit Union’s schedule of fees lists the following overdraft fees:

• Paid- Nonsufficient Funds (overdraft item paid): $30
• Returned – Nonsufficient Funds: $30
• Paid – Uncollected Funds: $30
• Returned – Uncollected Funds (includes checks, line of credits checks, VISA drafts, ACH, DCU debit card, and ATM withdrawals): $30
• Automatic Overdraft Transfer From Savings: $5 per transfer

Although some consumers take issue with returned item fees, lawsuits against Digital Federal Credit Union specifically call out the bank’s practice of charging overdraft fees.

Plaintiff Brandi S. filed her class action credit union overdraft lawsuit against Digital Federal Credit Union in July 2018. Brandi claims that she was charged overdraft fees even if she had the balance in her account to cover a transaction. She allegedly experienced this in December 2014, when a $37.18 transaction triggered a $30 overdraft fee despite her account maintaining a positive balance of $311.15.

In December 2018, a federal judge in Massachusetts district court determined that Brandi’s class action credit union overdraft lawsuit could move forward based on the credit union’s overdraft disclosures.

While legal action is pending against the credit union, consumers can prevent racking up excessive overdraft fees by taking the following steps:

• Opt out of overdraft protection: consumers are required to opt in to overdraft protection programs before credit unions and banks can charge overdraft fees. By stopping this service, a bank cannot charge a consumer overdraft fees.
• Watch your account balances regularly: most banks offer mobile banking that allows consumers to keep a close eye on account balances and avoid transactions that would overdraft accounts.
• Set up alerts for low balances: some banks also offer alerts that will tell consumers when their accounts reach a certain balance. Like watching account balances, this can help consumers avoid transactions that would overdraft their accounts.
• Deposit or transfer money quickly after an overdraft occurs: although this may not always be possible, transferring money into an account quickly after an overdraft may resolve the issue before the bank processes the transaction. However, this may not be feasible depending on how quickly banks process overdraft transactions.

Any of these methods can help consumers keep their accounts in the clear and avoid potentially detrimental fees that add up quickly.

If you were charged unfair overdraft fees by your bank or credit union, you could be eligible to participate in a FREE class action lawsuit investigation. If you qualify, an attorney will contact you to discuss the details of your potential case at no charge to you.

Fill out the form on this page now for a free, immediate, and confidential case evaluation.

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