Many customers have become victims of improper practices by financial institutions and credit unions that increase overdraft fees on debit card balances, checks, and ATM withdrawals. When customers incidentally overcharge their checking accounts, spending more than they have in their available, banks traditionally charge overdraft fees.

Many customers may have been affected by increasing overdraft charges, including credit union members using the BECU overdraft protection program.

Financial institutions can increase the number of overdraft fees charged by processing transactions in the order of largest to smallest transaction. For example, if a customer overdrafts their account through the charging of multiple transactions, a bank might choose to process the charge with the highest balance first and then other minimal accounts in decreasing order.

Overdraft fee practices, such as BECU overdraft protection, are currently being investigated by consumer advocates. Although potential new implementations and rules may help future consumers from having to suffer deceitful overdraft protection charges, it does not help those that have already been affected.

Overview: Overdraft Protection

An overdraft charge is a service fee charged to a customer’s checking account that helps move funds from a line of credit or another account such as a linked money market or secondary checking account to help cover the transaction in case of insufficient funds. The transfer of additional funds when needed comes at the cost of an overdraft fee charged by the bank.

Several financial institutions and credit unions are being investigated for potentially improper overdraft protection charges. These include:

• Pacific Western Bank
• Nationwide Banking
• Any bank in California
• Pentagon Federal Credit Union
• Alliant Credit Union
• Boeing Employees Credit Union (BECU)
• First Technology Federal Credit Union
• Star One Credit Union
• America First Credit Union
• Vystar Credit Union
• Digital Credit Union
• American Airlines Federal Credit Union

As of Aug. 15, 2010, unless a customer has specifically approved adding an overdraft fees service to their accounts, a financial institution is prohibited from charging it or implementing the program.

Overdraft Fee Lawsuits

Several class action lawsuits have been filed against a number of financial institutions for deceptive practices. A senior policy counsel at Consumers Union have even warned that with overdraft protection fees, “So-called ‘overdraft protection’ programs are really just a way for banks to bilk their most vulnerable customers with costly fees.”

If you or someone you know have suffered or been a victim of deceitful overdraft protection services, you may be eligible to join a free class action lawsuit investigation. These lawsuits allege improper financial practices, the failure to notify customers of fee structures, and the mismanagement of funds. Moreover, many class action lawsuits allege financial companies of processing charges to a customer’s account deliberately out of order so that they are able to maximize profits and revenue.

You may have a legal claim if your were charged excessive overdraft fees by one of these banks or credit unions:

• Alliant Credit Union
• Astoria Bank
• BECU (Boeing Employees Credit Union)
• Nationwide Pacific Western
• State Employees Federal Credit Union (SEFCU – New York)
• Sterling Bank

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