Emily Sortor  |  July 17, 2019

Category: Banking News

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Fees written on wooden blocksDigital Federal Credit Union of New England has reached a settlement with customers who claim that the credit union wrongfully charges customers overdraft fees.

Information on the settlement terms and amount has not been released. Reportedly, request for preliminary approval will soon be filed, and the customers and the bank have yet to finalize the terms of the settlement deal.

The Digital Federal Credit Union overdraft class action lawsuit was filed by Brandi Salls in June 2018. She says that she was assessed an overdraft fee on transactions even though there was enough money in her checking account to pay for the transactions.

Credit Karma notes that overdraft fees are charged when there is not enough money in an account, but the bank or credit union allow the charge to go through nonetheless, and charges a fee for the service.

Overdraft fees are a significant source of profits for banks and credit unions — Center for Responsible Lending notes that banks made over $11.45 billion in overdraft fees in 2017. 

In her credit union overdraft fees class action lawsuit, Salls asserted that charging of overdraft fees in instances in which a customer’s ledger indicated that there was enough money in the account violates the contract that Digital Federal Credit Union has with its customers.

She says that the company made a practice of violating its now contract and improperly charging overdraft fees in the case of many customers, not just her.

The unfair overdraft class action lawsuit goes on to say that Digital Federal Credit Union’s practice of improperly charging overdraft fees violates federal law. Allegedly, the company did not describe the actual overdraft service in its Opt-In contract.

According to the lawsuit, Salls says that the contract “fails to describe the actual method by which [the credit union] calculates its overdraft fees, instead describing a method under which overdrafts only result when there is not enough money.”

Additionally, the excessive overdraft fee class action lawsuit says that the Electronic Fund Transfer Act prohibits financial institutions from charging overdraft fees for ATM transactions and non-recurring debit card transactions, but allegedly did so anyway.

The credit union did attempt to have the claims dismissed last September, arguing that the overdraft policy was indeed properly explained. According to the credit union, the fact that the contract said that if there was not enough money in the “available balance” an overdraft fee would be charged was indeed clear enough.

Digital Federal Credit Union claimed that the term is commonly “understood to mean the money in an account minus holds placed on funds to account for uncollected deposits and for pending debit transactions.”

Judge Timothy S. Hillman rejected this move for dismissal, determining that customers would not necessarily understand the term. However, Judge Hillman did remove some claims, including unjust enrichment, money had and received, and claims filed under the Electronic Fund Transfers Act in the case of transactions made over a year before the overdraft fee class action lawsuit was filed.

The Digital Federal Credit Union Unjust Overdraft Class Action Lawsuit is Case No. 4:18-cv-11262, in the U.S. District Court for the District of Massachusetts.

If you were charged overdraft fees or NSF fees by your bank or credit union that you believe are improper for any reason, the attorneys who work with Top Class Actions are ready to investigate these fees on your behalf.

Learn more by filling out the form on this page.

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This article is not legal advice. It is presented
for informational purposes only.

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