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A California man says that Target tricks consumers into using a payment method that comes with an unreasonable risk of excessive fees.
Plaintiff James Walters claims that Target deceptively presents its RedCard payment method as an analog to traditional debit cards, when in fact using the card exposes consumers to vastly more expensive penalties and fewer legal protections.
According to the Target class action lawsuit, Target’s RedCard is a house-brand payment method that the retailer offers customers.
Using a RedCard to pay for a Target purchase initiates an electronic transfer of funds from the customer’s associated bank account. In exchange for using the RedCard, Target offers customers a five percent discount on all Target purchases made with the card.
Walters says that Target exploits consumers’ ideas of how debit cards work to get them to use the Target RedCard – which Walters says doesn’t work like traditional debit card at all.
According to the class action lawsuit, Target tells customers that funds for purchases made with a RedCard are immediately and directly withdrawn from the customer’s checking account.
Target also requires customers to pick a unique Personal Identification Number for use with the card. Walters argues that these aspects of the RedCard deceptively encourage customers to think it works like a debit card.
The problem, according to Walters, is that RedCard transactions don’t work like debit card transactions at all. He says that purchases made with a RedCard function are processed over the Automated Clearing House network.
These ACH transactions function more like electronic checks, Walters says. They do not immediately draw funds from the payer’s bank account, causing a delay that he says consumers aren’t expecting.
In addition to the delay inherent in ACH transactions, Walters says Target intentionally delays processing RedCard transactions.
He alleges that to save money on processing fees, Target submits RedCard transactions to the ACH network in massive batches. This batch processing can add several days to the time it takes a single transaction to post to the customer’s account, Walters claims.
This delay increases the chance that a customer’s checking account may become overdrawn by the time the Target transaction posts, Walters says.
Like banks, Target charges its RedCard customers a fee if the transaction is refused. But unlike bank fees, which are regulated by federal law, these Returned Payment Fees are unrestricted.
Walters claims that a single declined RedCard transaction can rack up compounded RPF charges of $100 or more.
In addition to the RPFs, Walters says the customer’s bank may also charge an NSF fee for the declined transaction. Walters adds that while Target’s card agreement warns customers about the possibility of being assessed “overdraft fees,” it makes no mention of the danger of NSF fees.
Walters quotes several customer complaints from Internet forums showing that many who signed-up for and used the RedCard had the mistaken impression – allegedly based on Target’s representations – that the card would work just like a debit card.
Some of these customers say this alleged misrepresentation resulted in their being hit with RPF charges they weren’t expecting.
If certified by the Court, Walters’s proposed Class will include all U.S. consumers who incurred RPF charges by using their Target RedCard within the applicable statute of limitations period.
The plaintiff is asking the court to award damages and restitution of all charges Target has assessed its customers as a result of its alleged deceptive business practices, plus costs and attorneys’ fees.
Walters is represented by attorneys Jeffrey Kaliel of Tycko & Zavareei LLP; and Jeffrey Ostrow and Scott Edelsberg of Kopelowitz Ostrow Ferguson Weiselberg Gilbert.
The Target RedCard Class Action Lawsuit is James Walters v. Target Corp., Case No. 16-cv-1678, in the U.S. District Court for the Southern District of California.
UPDATE: On June 19, 2019, Target debit card holders reached a $8.2 million class action settlement which would end claims that Target deceptively markets its store debit card.
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100 thoughts onTarget Class Action Says RedCard is Deceptively Marketed
When I signed up for the red card, the associate let me know that it took a few days to be taken out, basically like a credit card minus the interest. It should be treated as such. I was scared when I saw the article. I’m glad I read it all. Yes companies pray on vulnerable people. If you can’t be responsible enough to use a credit card, you should have the debit card either.
This just happened to me! I am on a fixed income and was charged over $100.00 in fees from my bank.
I would like to be a part of this!
If you don’t have the money in your account don’t use the card.
It does not matter if it takes 30 seconds or 30 days to come out of your account you should KNOW what funds you have available to spend and shop accordingly.
I would like to be part of it
It is wrong. I got a charge. It was my fault I did a check by phone to pay target a $25 fee. They reinstated my card and a month later locked my card due to owning them a $35 fee. They then claimed it was never a $25 fee and after 9 months they are still trying to find out what that $25 went to. I was able to prove it went to a fee as an electronic check has a physical copy with my bank. Here is the best part. My bank doesn’t charge overdraft fees for debt cards. They said if the Target card had worked like a debt card my bank could not have charged me an overdraft fee of $29 which caused another overdraft from an actual check I had written. So this ended up costing me $83 and if it had worked like it was supposed to it would have costed me nothing. Again though I knew it can take 1-3 days and I had an emergency come up and had to write that other check and prayed I would get lucky and I didn’t. Target actually cleared my charge the next day which is very unusual for them. But again hadbit been a debt purchase I would not have had bank fees due to my banks policy of zero NSF fees on debt purchases. So this does need to be fixed.
They are deceptive. I went on a payment plan due to unemployment, was told id still be able to use my account. I chose not to use it because I didn’t have income ao I put the card away in safe keeping. At the end of the payment t plan I wanted to use it for medical emergency and was.told it was closed because I had made late payments. Apparently, being on a payment t plan due to unemployment, with a 6% interest rate they offer, causes the account to close. That was 5 years ago. I have been paying it off slowly ever since, u til this month. I never missed a payment. I tried to log I to my account to pay online – mind you, been paying online for over 6 years and I dont get paper statements – and my account is locked. I called and was told it was locked because my account is closed. Well, it’s been closed since 2011, and I never once got a letter telling me I’m unable to make online payments, and I had to ask for paper statements. So they weren’t even going to send me a bill? And that’s not deceptive?? They’ve gone out of their way to force me I to possibly making a late payment and so far every time ive been able to pay on time. Next they’re probably going to tell me I can’t pay by check anymore. I dont trust their reps. Paying 24% interest, not complaining, but there is no reason I was not informed that I couldn’t pay online anymore.
Hoe do I join
They haven’t even settled the target breach suit yet. With ALL these breach of credits going on its affected my credit so badly I can’t get a loan for a much needed surgery. I will die before all this is repaired. ITS WRONG ! !!!
The problem is not whether a person accurately notates their purchase. The basis for the case is how Target advertised the Red Card as a debit card and it is not. They misrepresented how this banking service/product worked and caused financial loss because of it. My personal story is long and boring but it was Christmas and my banking info was stolen at another retailer so the funds were not available due to theft. That happened days later for this reason my bank wouldn’t include the Overdraft charges for Target as part of my loss claim and then Target charged a fee as well. I was charged/lost $115.00 for something that wasn’t my fault.
TCA Viewers: As of July 8, 2016, the Target RedCard class action lawsuit has not been settled, therefore a claim form is not available. Top Class Actions will let viewers know if a settlement is reached, and if and when a claim can be submitted. Please sign up for a free account at TopClassActions.com and follow the case. If a claim form becomes available, and you have marked this article as a ‘Favorite’, then you will be notified when we update the article. A link to creating an account may be found here: https://topclassactions.com/signup/.