The banking industry made over $35 billion off of customers in 2015 from overdraft fees alone. Now, it seems that credit unions are following in the footsteps of big banks.

Overdraft fees charged to customers by their credit union when an account is overdrawn are not illegal. In fact, many credit unions, like Mountain America Federal Credit Union and Vystar Credit Union, offer customers an overdraft protection program should an overdraft situation occur.

However, it has been alleged that many credit unions may be manipulating how charges are allocated to customers’ accounts to unfairly increase overdraft fees.

Specifically, these credit unions may be processing transactions starting with the largest-dollar-amount transaction and ending with the transaction with the smallest dollar amount, rather than processing all transactions in chronological order.

This is done without fully or accurately disclosing these practices to customers. This type of processing makes customer account balances fall faster than they should, which increases the number of fees that occur when an account is overdrawn and increases the banks’ revenue.

Overdraft Definition

Put simply, an overdraft is an act or instance of overdrawing a checking account. Additionally, transactions conducted via ATM withdrawals and debit card purchased can fall under the umbrella of an overdraft definition.

When consumers spend or withdraw more money from their checking accounts than is available, they are assessed a fee from their credit union – commonly referred to as an overdraft charge, overdraft protection fee, or courtesy fee.

The credit union can choose to cover the payment by advancing funds on the consumer’s behalf, and generally charges a fixed overdraft fee for doing so or can choose to return the payment if it is a check, online bill payment, or direct debit, and then charge a non-sufficient funds fee.

In recent years, most credit unions have adopted automated systems for making these decisions. These systems have contributed to the evolution of overdraft from an occasional courtesy to a significant source of industry revenues.

For example, Mountain American Federal Credit Union’s overdraft protection (called Overdraft Privilege) states the credit union will cover checking and debit card transaction when a customer’s account lacks sufficient funds for a $20 fee for up to a maximum of five transactions per day.

Vystar Credit Union’s overdraft protection automatically transfers money from a savings account or line of credit into a checking account should a customer have less money in it than needed for a transaction. They charge $32 for each overdraft.

Credit Union Overdraft Fee Lawsuits

An investigation into excessive overdraft fees and other potentially improper fees charged by credit unions has been launched, with many Americans filing overdraft fee lawsuits against some of the nation’s largest credit unions and banks in order recoup the excessive overdraft fees they allege were charged when their account balances fell below a minimum balance.

In addition to charging excessive overdraft fees, they also claim that credit unions and banks routinely apply larger transactions before smaller ones – all for the purpose of collecting additional overdraft fees.

Numerous credit union overdraft fee lawsuits have been filed to assist affected consumers to recoup those overdraft fees. If you would like to find out how to recoup overdraft fees assessed against you, contact a credit union overdraft fee attorney for more information.

ATTORNEY ADVERTISING

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