Financial analysts are reporting that banks and credit unions are raking in record amounts of money from overdraft fees, in spite of federal regulations to limit such fees.

In 2010, new regulations kicked in, limiting just how much a bank can charge for overdraft fees. In spite of this, in a 12-month period U.S. banks raked in more than $32.5 billion dollars in overdraft fees, the highest amount since the regulations went into place. A number of factors made this possible.

A report by Moebs Services, found that a big part of the take came from consumers themselves overdrawing at record levels. As consumers overdraw their accounts, banks and credit unions can make record-breaking overdraft fee profits.

Another factor is that some financial institutions have found a way to skirt the rules against overdraft fees by charging for “overdraft protection.”

While overdraft protection sounds like a boon to overdrawn customers, in many cases overdraft protection triggers a fee in cases when funds would just get declined, possibly costing the consumer nothing. Another concern with overdraft fees is credit unions.

Credit Union Overdraft Fees

Credit unions often promote themselves as a smaller, local, home-grown alternative to national bank chains. But the five largest credit unions, State Employee Credit Union of Maryland, State Employee Credit Union (Albany, NY), Wescom Central Credit Union (California), San Antonio Federal Credit Union, and Tower Federal Credit Union, control more than $2.7 billion in assets.

And while credit unions often promote themselves as having lower fees than regular banks, there is a growing trend of increasing overdraft fees at credit unions. As a group, credit unions have been accused of increasing their fees faster than traditional banks.

It has been alleged that some credit unions have taken this a step further, by actively changing the order that transactions are processed, so that funds are withdrawn before a deposit goes through. This would allow the credit union to charge an overdraft fee. Some big-name banks have faces overdraft fee lawsuits over such action. Such actions may violate banking laws.

Credit Union Overdraft Fees Class Action Lawsuit

A overdraft fee class action lawsuit investigation has been launched to explore the possibility of legal action over questionable overdraft fee practices.

In general, customers allege that credit unions have deliberately gamed the system to generate inappropriate overdraft fees. An overdraft fee lawsuit could help customers recoup the costs of overdraft fees, court costs, and other costs stemming from allegedly-fraudulent overdraft fee practices.

ATTORNEY ADVERTISING

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