Across America, consumers are facing a growing problem of rising overdraft fees. Some banks and credit unions are allegedly not properly disclosing the fees and terms associated with their overdraft programs.

One of the banks under attack, Ally Bank, has been accused of failing to define overdraft fees.

Overdraft fees are fees that a bank or credit union charges to consumers to move money into a checking account to complete a payment. This transfer can be linked from a money market or savings account, or from a loan made by the bank or credit union.

Also known as insufficient fund fees or courtesy pay fees, banks and credit unions impose the fee for the overdraft service. A number of consumers have complained that financial institutions charge these fees without the customers signing up to receive the service, or without properly disclosing the overdraft fees to customers.

On Aug. 15, 2010, it became illegal for financial institutions to charge overdraft fees unless the consumers had signed up for overdraft protection. Some consumers continued to complain, however, and the Consumer Financial Protection Bureau is analyzing the overdraft fee practices of banks and credit unions and has promised stricter regulation.

Ally Bank Overdraft Protection Issues

Ally Bank changed its checking account policy on Aug. 15, 2015. The credit union announced changes including:

• No more unlimited reimbursement of ATM fees. The bank now only reimburses up to $10 per billing cycle.
• Increased overdraft fees. The bank raised overdraft fees from $9 to $25 per insufficient funds transaction.

Customers still have the ability able to receive unlimited overdraft transfers.

Consumers were disappointed by the changes, as the unlimited ATM reimbursement was one of the most popular features of Ally Bank. In addition, the overdraft fee announcement also came as a surprise for Ally Bank customers.

Ally bank customers are reportedly not alone in their dissatisfaction.

Some consumers opened accounts with credit unions to avoid being charged large overdraft fees and other hidden charges. However, credit unions have also been accused of overdraft violations in the face of decreasing customers and a worsening economy.

In addition to high overdraft fees, consumers have alleged that credit unions and banks have processed their transactions out of order in order to charge the maximum in overdraft fees.

Consumers who have been charged large overdraft fees may be eligible to take legal action against their financial institutions. Potential claimants should contact a specialized attorney to discuss the merits of a possible claim.

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