If you have an SEFCU checking account, you might be at risk for exorbitant overdraft fees, according to a recent class action.

State Employees Federal Credit Union (SEFCU) is based out of Albany, N.Y., where it was founded in 1934. Like many other financial institutions, SEFCU charges an overdraft fee when a SEFCU checking account customer spends or withdraws more money than is available at the time in the account.

At least one SEFCU customer has filed a lawsuit alleging the credit union charges overdraft fees even when an account is not in overdraft status. The plaintiff alleges SEFCU allegedly deducts the money from pending debit card transactions that create an artificial balance.

The customer argues that the way the company determines the artificial balance is not explained in the overdraft program’s opt-in contract. As a result, she says her SEFCU checking account allegedly incurs unauthorized overdraft fees.

Banks and credit unions make billions of dollars each year by charging overdraft fees. According to Moebs Services, Americans paid more than $34 billion in overdraft fees in 2017 alone.

In reality, fewer consumers are overdrafting their accounts. Because of the downturn in overdrafters, the financial institutions have increased their overdraft fees. Higher fees mean fewer overdrafts can still allow the financial institutions to make bank.

In addition to using creative math to promote the number of overdraft fees they collect, banks and credit unions might post transactions out of chronological order to maximize the number of overdraft fees they can collect in one day.

SEFCU Checking Account Among Others Under Investigation

In addition to an SEFCU checking account, many other banks and credit unions are under investigation for possibly engaging in unfair overdraft practices in checking accounts, including:

• Alliant Credit Union
• Astoria Bank
• BECU (Boeing Employees Credit Union)
• Educational Employees Credit Union (EECU – California)
• Nationwide
• Pacific Western
• Patelco
• Sterling Bank

Many financial institutions have faced lawsuits regarding their failure to fully disclose fee structures, their mismanagement of money, or capitalizing on customers with the least amount of money by deliberately processing transactions to charge the maximum number of overdraft fees.

According to the SEFCU checking account lawsuit, “SEFCU’s practice of charging overdraft fees, even when there is enough money in the account to cover a transaction presented for payment, is inconsistent with how SEFCU expressly describes the circumstances under which overdraft fees are assessed.”

If the allegations are true, the lawsuit offers further proof that financial institutions are pushing legal and ethical boundaries to enhance their own financial positions at the expense of those of their customers.

Two or three decades ago, a majority of overdraft fees were charged when a check cleared the bank, leaving the checking account clearly in overdraft status. Because most purchases are made with debit cards as opposed to checks now, the electronic posting lends itself to greater manipulation within bank or credit union’s system.

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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