Some credit unions are charging almost as much as banks for an overdrawn account. Once considered a lower-cost alternative to traditional big banks, credit unions are now following in the footsteps of banking giants and adopting stricter policies when it comes to overdraft protection, possibly at the expense of customers.

Overdraft Protection is a common bank service that links a checking account with a line of credit, savings account, credit card, or second checking account. Overdraft Protection helps prevent against declined transactions, returned checks, or other instances where a customer’s checking account does not have sufficient funds to cover the transaction. The service automatically transfers a customer’s funds between linked bank accounts, and is typically accompanied by an overdraft transfer fee of about $35 for each transaction.

Credit Unions Raising Overdraft Fees Faster Than Banks

Research conducted by Moebs Services shows that when it comes to overdraft fees, credit unions are raising overdraft fees at a significantly faster rate than most banks. Since 2009, credit unions have raised their overdraft fees by 14 percent to reach a median fee of $28.50 per transaction in 2014. During the same time period, banks have only raised their fees by 3 percent, though their median overdraft fee is still higher at $30.

Researchers state that credit unions may be raising their overdraft fees more rapidly than banks due to a variety of factors. For one, the volume of fee revenue has declined as consumers have become more cautious about overdrafting their accounts. Compounding the issue, the recent recession left some credit unions with high losses on loans they made to consumers who were then unable to repay the loans. While credit unions kept fees low during the heart of the recession, by 2012 they needed additional income and started raising overdraft fees.

Allegations of Unlawful Overdraft Fees

Amid the rising fees, credit unions have been hit with consumer complaints and allegations of excessive or unfair overdraft fees. Specifically, customers of some credit unions have begun to allege that the credit unions misrepresent account balances in order to nudge customers into overdrawing their account, allowing the credit union to collect overdraft fees.

Some unhappy customers have filed credit union overdraft fee lawsuits to fight back against the credit unions’ rising overdraft fees. Legal complaints include assertions that the fees are based on available balance, not actual balance, the fee structures are not clearly disclosed, and members do not receive accurate information about their available balances. For some credit union members, the confusion reportedly involves holds on debit transactions, which are not always made clear to members.

Credit unions have also faced allegations that they improperly reordered customer transactions to maximize income from overdraft fees.  In 2015, Orange County’s Credit Union reportedly agreed to pay $1.8 million to settle complaints about unlawful excessive overdraft fees.

Consumers who suspect they are being charged improper credit union overdraft fees may want to consider speaking with an attorney, who can help determine if the charges were proper or improper and advise about possibly bringing a credit union overdraft fee lawsuit.

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