Banks and credit unions around the country are facing increased scrutiny over their deceptive overdraft fee practices. TCF Financial, a Minnesota-based company with over 160 branches in the Chicago area, is one of the latest institutions to come under fire for allegedly improper overdraft programs.

TCF recently disclosed in a U.S. Securities and Exchange Commission filing that the company received a letter from the Consumer Financial Protection Bureau (CFPB) at the end of October.

This letter from the regulator’s agency said the enforcement office “is considering recommending that the CFPB take legal action against TCF related to compliance with laws relating to unfair, deceptive and abusive acts and practices . . . in connection with TCF’s practices in administering checking account overdraft program ‘opt-in’ requirements.”

TCF shared their opinion on the matter, saying “We believe our overdraft ‘opt-in’ practices comply with all applicable laws and regulations.”

TCF has the opportunity to respond to the letter from the CFPB in a written statement letting the agency know why they should not take action against TCF.

The $20 billion-asset bank said, “We are currently unable to predict the ultimate timing or outcome of this matter which could have a material adverse effect on TCF.”

According to some analysts, the letter from CFPB appears to substantiate concerns that investors have had about TCF, as the bank has historically drawn a large amount of income for fees and service charges for its products, such as overdraft protection.

Banking and Credit Union Overdraft Fees

Since 2010, financial institutions have been required to get direct affirmation from a customer to opt in to an overdraft protection program.

This approval allows banks and credit unions to process everyday transactions using a debit card or authorize a cash withdrawal using an ATM card when these transactions exceed the consumer’s account balance. In exchange for the debit card transaction or ATM withdrawal approval, banks charge a service fee for the courtesy.

Fees for overdrafts average around $27 to $28 dollars for overdraft fees, with some as high as $35 per overdraft transaction. Many banks do not have a cap on the amount of fees that can be charged in a day, so customers can rack up dozens of these charged if they aren’t careful. A few banks put a cap of 1-5 per day, but because the practice is easy income for banks, they don’t have much incentive to cap their fees.

Larger banks like Chase, Wells Fargo, Bank of America, US Bank and Citigroup Inc. have their fair share of complaints by consumers over these fees, but smaller credit unions that have historically promised lower fees have come under fire as well.

Such credit unions include Digital Federal Credit Union in Marlborough, MA, Bethpage Federal Credit Union in, Bethpage, NY, Alaska USA Federal Credit Unionin Anchorage, AK, Vystar Credit Union in Jacksonville, FL and Citizens Equity First Credit Union in Peoria, IL. In short, no financial institution is immune from consumer backlash about overdraft charges.

Last year, a Pew report discovered that many customers still feel like they are in the dark when it comes to banking overdraft practices, and they certainly disapprove of high fees.

The survey found that more than half of those who were charged an overdraft fee do not recall opting in for the service. The general consensus appears to be that there is a lack of transparency surrounding the rules governing such practices.

Credit Union Overdraft Fees Lawsuit Investigation

Consumers are becoming more aware that credit unions, who once promised lower fees than their big banking counterparts, are now some of the institutions with the fastest-climbing overdraft fees. If you have been charged overdraft fees by your credit union, you may lave a legal claim. An attorney will review your case and can assist in determining if you qualify for an investigation.

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