SEFCU Credit Union overdraft protection and other overdraft programs may involve practices that take advantage of consumers.

Overdraft protection programs are offered to consumers who may be worried about their transactions being denied due to insufficient balances. Essentially, these programs allow consumers to proceed with transactions that would otherwise make their accounts go negative.

Overdraft protection typically moves money from a saving account or credit line into the overdrafted checking account, which allows the transaction to proceed. SEFCU Credit Union overdraft protection and other programs are very convenient but almost always are associated with fees.

With more consumers using mobile banking to keep track of their account balances, fewer consumers consistently overdraft their accounts. Although this is good for the average consumer, this is bad news for banks which use overdraft fees and other charges to generate a profit. To maintain their profit margin, many banks have raised overdraft fees to around $35.

Although there is nothing illegal about raising overdraft fees, consumers report that some institutions may be using deceptive practices to maximize the number of fees charged to consumers.

Consumer reports suggest that some credit unions may process transactions out of order in order to maximize the number of overdraft fees they can charge. For example, if larger transactions are processed before smaller ones, even if the smaller transactions were made earlier, the larger transactions may overdraft the account sooner. Then more subsequent transactions will incur an overdraft fee.

Other deceptive overdraft practices may include charging overdraft fees based on the available balance opposed to the actual balance. The available balance is typically lower than the actual balance for a checking account. So even if the actual balance would allow a transaction to pass through, using the lower available balance may result in unfair overdraft fees.

Some consumers claim that additional practices, such as allowing customers to overdraft their accounts multiple times, are also unfair and deceptive due. Repeatedly charging overdraft fees using deceptive practices can cause serious financial damage to consumers as they can add up to over $100. Considering that consumers who repeatedly overdraft their checking accounts are often in a difficult financial situation to begin with, relentless overdraft fees become even more insidious.

Consumer complaints have prompted the Consumer Financial Protection Bureau, which sets regulations for banks, to investigate overdraft fee practices across the industry. The CFPB has in the past enacted regulations designed to curb abusive overdraft practices and help banking customers avoid unnecessary overdraft fees. However, future regulation will not help consumers who have already been hit with multiple fees under the SEFCU Credit Union overdraft protection plan.

Several banks and credit unions are under investigation by attorneys for potentially engaging in unfair overdraft practices. In addition to SEFCU Credit Union overdraft protection, other institutions being investigated include Astoria Bank, Boeing Employees Credit Union (BECU), Educational Employees Credit Union (EECU) of California, Nationwide, Pacific Western Bank, and Sterling Bank.

You may have a legal claim if your were charged excessive overdraft fees by one of these banks or credit unions:

• Alliant Credit Union
• Astoria Bank
• BECU (Boeing Employees Credit Union)
• Nationwide
• Pacific Western
• Patelco Credit Union
• State Employees Federal Credit Union (SEFCU – New York)
• Sterling Bank
• Educational Employees Credit Union (California)

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