Consumer advocates are concerned that overdraft fees at Meriwest may be assessed in a way that maximizes the credit union’s overdraft fee revenue at its members’ expense.

Meriwest Credit Untion is a Bay Area financial service currently headquartered in San Jose, CA. The company began in May 1961, when a group of IBM employees organized an IBM San Jose Employees Federal Credit Union. The company later changed its in in 1975 to Pacific IBM Employees Federal Credit Union, when then later became Meriwest Credit Union in 1999.

In the past, membership was only available to IBM employees and their families. Today, any person who works and lives the Greater Bay Area of Northern California or in Tucson, Arizona is eligible to open an account. Today, it has a membership number of approximately 72,000 and an excess of $1.3 billion in total assets.

Many financial institutions, including Meriwest Credit Union, offer a banking service known as overdraft protection. This simply means that a customer who utilizes this service can become protected if they were to overdraw from his or her account. If they were to overdraw, they bank would simply offer protection by paying the transaction.

Overdraft protection at Meriwest Credit Union is an opt-in program for certain types of checking account transactions.

The overdraft protection will often apply when a consumer over draws his or her account during either a point of sale using a debit or credit card or when a check bounces due to insufficient funds. In the past, a financial institution would simply refrain from honoring the check or point of sale transaction. However, banks now use the overdraft protection service for which they protect the consumer and pay for the transaction.

A drawback, moreover, is that financial institutions typically charge for the consumer whenever they are in need of overdraft protection. So overdraft fees at Meriwest Credit Union will be assessed for each point of sale transaction that they had to cover for.

The current overdraft fees at Meriwest Credit Union are $35 for each overdraft protection charge covered. Additionally, the fee is assessed each time a transaction goes through an account once it’s been overdrawn.

Of particular concern for credit union members is the fact that processing transactions in a different order than the one in which they were received can lead to additional overdraft fees at Meriwest.

According to Meriwest’s overdraft protection policy, “transactions may not be processed in the order for which they occurred; therefore, the order in which transactions are received and processed may impact the total amount of fees incurred.”

For example, a bank may post transactions through a consumer’s account in the order of greatest amount first, instead of the order in which the transaction was made. In that way, by posting the transaction in the greatest amount, the account may become overdrawn sooner, and every transaction posted after that will incur an overdraft protection charge.

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