Customers who look to credit unions for a better deal may still get an unpleasant surprise in the form of high fees for overdraft services they didn’t mean to opt into.

Although credit unions have a reputation of being fiscally kinder to their members than banks are to their customers, Moebs Services is reporting that credit union overdraft fees are on average not significantly lower. A report from 2015 shows the median overdraft fee at credit unions that year was $29, only one dollar below the $30 median fee charged by banks.

Those fees have also increased faster at credit unions than they have at banks. A Moebs Services report from 2013 showed that while the median bank overdraft fee held steady at $30, the same fee at credit unions increased from $25 to $28 over the previous three years. The report says credit unions began raising their fees to cover a decline in fee revenue as members became more cautious about incurring overdraft fees.

Take Desert Schools Federal Credit Union, for example. According to their website, Desert Schools Federal Credit Union serves over 300,000 members who live, work, go to school, or attend religious services in Arizona’s Maricopa, Gila and Pinal counties.

Desert Schools offers overdraft protection at a cost of $5 per transaction. Covered overdrafts are paid from either a linked Desert Schools account or from an overdraft protection line of credit. Members must affirmatively opt into these services, and the line of credit option is subject to credit approval.

But by default, new Desert Schools personal checking accounts come with a service called Privilege Pay. Privilege Pay will also pay overdrafts, as an alternative to letting a check bounce or an ACH payment be denied. But this service comes at a much higher fee of $35 per transaction – the same as Desert Schools’ NSF fee, and the same as the highest fees charged by banks reviewed in the 2013 Moebs Services report.

Privilege Pay may stay active on an account even after the member has opted into overdraft protection service, so that an overdraft that exhausts the overdraft protection may incur the $35 Privilege Pay fee. Members who don’t want Privilege Pay must contact the credit union and affirmatively opt out of it.

Overdraft Fee Class Action Lawsuits

In September 2015, an overdraft fee class action lawsuit began that has since roped in at least 15 different credit unions in 10 different states. Plaintiffs in these actions are taking issue with several different practices related to overdraft fees.

Some claims allege the credit unions inadequately disclosed the terms of their overdraft protection programs. One case against a Florida-based credit union alleges it improperly increased its overdraft fee revenue by assessing fees based on members’ available balances, rather than on their actual balances.

Recently, the federal Judicial Panel on Multidistrict Litigation denied a request to consolidate 11 credit union class action lawsuits into a single court in Illinois, stating that the claims were not similar enough to make consolidation worthwhile.

A previous volley of lawsuits had alleged that credit unions had been improperly processing transactions in an order that would maximize the number of overdraft fees assessed.

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