The Educational Employees’ Credit Union, based in California, is now within a class action investigation concerning its EECU overdraft protection program. Numerous credit unions and banks have been named in this investigation looking at whether or not deceptive checking overdraft practices were used.

Customers might choose an overdraft protection program to allow them to make a purchase in the moment even if the bank account does not have enough money. The tradeoff for this is that the bank can charge an overdraft fee for each item that takes the account or keeps the account into the negative. Individuals who opted into the EECU overdraft protection program offered by the credit union might not realize that they have substantial fees attached to their banking account.

A consumer who has multiple charges that trigger individual overdraft fees could be facing a difficult situation to bring their account balance back to the positive. Paying balances due on top of fees runs many into the red for the long-term, especially individuals who live paycheck to paycheck.

Reports suggest that many credit unions and banks have been increasing the overdraft fees that they impose on debit card balance, ATM withdrawals, and checks. Some consumers could also have been subject to a reordering process in which the bank manages the transactions out of order to obtain the maximum possible overdraft fees.

Overdraft protection bank fees, especially if the bank reordered the transactions to collect multiple overdraft fees, can shock a consumer who discovers this after the fact. This kind of behavior by the banks can also be shocking, but these actions have become more common lately, like the steadily increasing the number of fees associated with EECU overdraft protection.

Overdraft Fees as Profit

Currently, consumer advocates are investigating many different policies around the country, including those associated with EECU overdraft protection. A number of different instutition have been accused of mishandling these overdraft practices, including Pacific Western, Nationwide, Astoria Bank, and Alliant Credit Union.

While banks are well within their rights to charge overdraft fees, such as when a person affirmatively opts into the EECU overdraft protection program, consumers allege that some banks are attempting to leverage maximum fee collection by processing the consumers’ transactions out of order.

A bank that reorders transactions can collect multiple overdraft fees because reordering makes more transactions trigger a fee. Consumers who attempt to purchase from a bank account with insufficient funds might only be expecting one overdraft fee. But depending on the timing of the transactions, they can face a domino effect. This is only one possible form of deceptive overdraft practice that banks and credit unions have been accused of in recent years.

Recent lawsuits against credit unions and banks have been filed over mismanagement of funds, failure to disclose fee structures appropriately and other inappropriate financial practices. More class action lawsuits today are alleging that these programs are processing overdraft fees for profit margins.

Some consumers allege additionally that banks continuously allowed customers to overcharge checking accounts regardless of the fact that there were insufficient funds in order to collect additional overdraft fees. Many consumers claim that these questionable practices harmed them financially and should not have been allowed to be carried out in the first place. There have even been legislative efforts to protect consumers against overdraft fees.

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
• Patelco Credit Union
• State Employees Federal Credit Union (SEFCU – New York)
• Sterling Bank
• Educational Employees Credit Union (California)

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