A recent overdraft fees class action lawsuit alleges People’s United overdraft fees have been unnecessarily charged.

People’s United Bank is owned by People’s United Financial, a savings and loan holding company. People’s United Bank is headquartered in Bridgeport, Conn. and is a federally chartered stock savings bank. People’s United Bank has over 10 branches in Connecticut and holds roughly $39.18 billion in assets.

People’s United Bank has recently felt the heat from a proposed class action, filed in the state of Connecticut. Plaintiff Teriann Walker accuses the stock savings bank of unlawfully charging People’s United overdraft fees even when its customers have allegedly had enough money in their accounts to cover their transactions.

Overdraft fees have constituted a large amount of revenue and fee generator for banks and credit unions throughout the United States. In 2009, banks generated approximately $37 billion from overdraft charges on ATM transactions and from debit card purchases.

The overdraft practices lawsuit alleges that People’s United Bank allegedly lies to its consumers. Walker claims that the bank is in alleged violation of federal law, specifically due to the claims that it fails to accurately define its overdraft protection service in its “opt-in” contracts and define the actual method used to calculate its overdraft fees.

The lawsuit states that “nowhere in the Account Agreement … does the contract anywhere states that for purposes of an overdraft fee that [People’s United Bank] would deduct from the funds in the account holds for pending debit card transactions, or that pending debit card transactions will be subtracted from the balance to create a lower artificial balance different than the real balance for purposes of assessing an overdraft fee.”

According to People’s United Bank’s website, People’s United overdraft fees include an Overdraft Item Fee or Uncollected “UAF” Item Fee of $37, “for each overdraft item presented for payment, whether it is paid or returned.”

People’s United overdraft fees limit the total overdraft fee charged to the account overdrawn to a maximum of 5 per day. The bank says it will not charge the overdraft fee until all items have been posted at the end of the day.

People’s United says the overdraft fee will not be imposed on a given day if at the end of that day the account is overdrawn by less than $5. But “[i]f, at the end of day, your account is overdrawn by $5 or more, we will charge you an Overdraft or Uncollected ‘UAF’ Item Fee for each transaction that overdraws your account.”

Alternatives to the standard overdraft protection services offered by People’s United Bank includes an overdraft protection service that allows an account to link to either a savings account of credit card.

The personal credit card link is currently subject to approval. Funds transferred in advance, moreover, also incur an interest charge if transferred to an account to cover potential overdraft fees.

Overdraft protection from a linked savings account also incurs a $10 fee charged per transfer.

The People’s United Overdraft Fees Class Action Lawsuit is Case No. 3:17-cv-00304, in the U.S. District Court for the District of Connecticut.

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