Bank of Hawaii is facing a consumer class action lawsuit challenging the way it charges overdraft fees.

Plaintiff Rodney Smith says Bank of Hawaii has been assessing overdraft fees even when the affected checking account has enough money to cover the supposed overdraft.

Smith also argues the bank fails to accurately disclose its overdraft policy in its opt-in notice, which allegedly fails to fully describe the method used to assess overdraft fees.

According to this Bank of Hawaii class action lawsuit, the Account Agreement that governs Smith’s account says the bank will assess an overdraft fee only when the customer’s account does not have enough money to cover the transaction.

Smith cites similar language from the Bank of Hawaii Opt-In Agreement, an optional arrangement under which the bank provides overdraft protection for ATM and non-recurring debit card transactions.

The plaintiff claims that Bank of Hawaii violates both these agreements by using the available balance method to determine whether the account holds enough money to cover a given transaction.

According to Smith, the “available balance” consists of the account’s actual funds minus credit holds and anticipated future debits.

The available balance tends to be lower than the ledger balance, which is the sum total of all settled transactions without regard for anticipated transactions.

Using the available balance method in determining overdraft fees tends to result in more transactions overdrawing the account and qualifying for an overdraft fee.

Smith notes that this practice has gotten negative attention from the Consumer Financial Protection Bureau.

A study by the CFPB of actual bank practices found that “in some instances, transactions that would not have resulted in an overdraft (or an overdraft fee) under a ledger-balance method did result in an overdraft (and an overdraft fee) under an available-balance method.”

According to Smith, the way in which Bank of Hawaii implements its overdraft protection program is contrary to its own representations, its member’s expectations, and the express terms of its contract with account holders.

Smith also claims that by allegedly misrepresenting the terms of its overdraft protection plan, Bank of Hawaii violated Regulation E under the Electronic Fund Transfer Act.

This regulation prohibits the bank from assessing overdraft fees for ATM and non-recurring debit transactions, Smith says.

He also claims that because the Opt-in Agreement does not accurately describe how the bank charges overdraft fees, it fails to provide an accurate “brief description of [its] overdraft services” as required by Hawaii state law.

Smith seeks to represent two plaintiff Classes. The “Positive Balance Class” would encompass all Bank of Hawaii account holders who within six years prior to the filing of this case incurred overdraft fees even though their accounts held enough funds to cover the supposed overdraft.

The “Regulation E Class” would cover Bank of Hawaii account holders who incurred overdraft fees for ATM or non-recurring debit transactions since Aug. 15, 2010.

He is asking the court for an order barring Bank of Hawaii from continuing the practice complained of. He also seeks a damage award including treble damages under Hawaii law, plus costs, interest and attorneys’ fees.

Smith is represented by attorneys Margery S. Bronster and Robert M. Hatch of Bronster Fujichaku Robbins, Richard D. McCune of McCuneWright LLP, and Taras Kick of The Kick Law Firm APC.

The Bank of Hawaii Overdraft Fees Class Action Lawsuit is Smith v. Bank of Hawaii, Case No. 1:16-cv-00513, in the U.S. District Court for the District of Hawaii.

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