Consumer advocates are concerned that SEFCU ATM overdraft fees may not comply with applicable banking laws.

In a harmful trend, reports suggest that more and more banks and credit unions may be using deceptive practices to charge customers excessive overdraft fees. In particular, these fees can be imposed on debit card balances, checks, and ATM withdrawals. Customers who didn’t realize they had overdraft protection have been surprised with overdraft fees, and others have been hit with more fees than they were led to expect. 

The trend is not limited to for-profit banks. Members of credit unions like State Employees Federal Credit Union, or SEFCU, may be paying more in overdraft charges than they should have to.

About Overdraft Fees

Overdraft fees, or overdraft protection fees, are charged by banks and credit unions when a customer makes a purchase that exceeds the amount of money in their account, and the financial institution allows the purchase to go through nonetheless.

These fees are advertised as a convenience because they supposedly allow customers to have freedom over how and when they make purchases. However, these overdraft fee programs can be misleading. Customers who haven’t been given a proper disclosure of the terms can end up making purchases with money they don’t have, and can rack up hundreds of dollars in fees without realizing they have overdraft their account.

Because overdraft fee programs can be misleading, banks and credit unions are not allowed to charge overdraft fees or let customers overdraft their accounts unless they have actively chosen to enroll into an overdraft protection program.

Every year, banks and credit unions gain a large amount of their revenue from overdraft fees. However, fewer and fewer people are over drafting their account every year, perhaps in part because mobile banking is easier than ever, and customers can easily check their account balance from a mobile device or home computer.

Though banking has become more convenient for customers, banks are feeling the pressure of gaining lower profits from overdraft fees. So, some banks may be charging to deceptive practices in an effort to increase the number of overdraft fees they can charge their customers.

However, it is possible that banks and credit unions may be attempting to maximize their fee revenue nonetheless, as may be the case with SEFCU ATM overdraft policies. Certain practices may increase the number of fees that a credit union can assess on a particular account, such as determining overdrafts based on the available balance, which may be zero while the actual balance is still in the black.

SEFCU is one of a number of credit unions and banks being investigated for their overdraft practices, including:

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

Customers at some institutions report misleading language around overdraft fees, which can lead customers to not understand the circumstances under which they will be charged overdraft fees. Other customers report that their bank or credit union has processed transactions out of order so that they can charge overdraft fees on the highest number of transactions possible, when the customer would be charged overdraft fees on fewer transactions had the purchases been processed in the right order.

Credit union members who believe they’ve been overcharged for SEFCU ATM overdraft fees may qualify to participate in a free overdraft fees class action lawsuit investigation.

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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