Municipal Credit Union Unfairly Charges Overdraft, Insufficient Fees, Class Action Alleges

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Municipal Credit Union Class Action Lawsuit Overview:

• Who: Municipal Credit Union has been hit with a class action lawsuit due to its overdraft fees.
• What: Consumers say the company is being deceptive and breaching its contracts in how it processes overdraft fees.
• Where: The lawsuit covers consumers across the US.

Municipal Credit Union breaches its contacts with customers by charging multiple $32 insufficient fund (NSF) fees on the same transaction and overdraft (OD) fees on transactions, misleading consumers and breaching its contracts, a new class action lawsuit alleges.

The nationwide class action lawsuit was filed in New York on Sept. 10 by lead plaintiff Elsa Thompson, who alleges the bank has been “unfair and unjust” and breached contractual promises regarding the fees.

Through the imposition of overdraft and NSF fees, Municipal makes millions of dollars annually, the class action states. 

The class action lawsuit also claims Municipal’s fees “fall disproportionately on racial and ethnic minorities, the elderly, and the young, many of whom regularly live paycheck to paycheck and therefore carry low bank account balances.”

According to the lawsuit, Municipal’s Account Agreement and Regulations allow the company to charge a single $32 NSF fee or a single $32 overdraft fee when a transaction is returned for insufficient funds or paid despite insufficient funds. However, the credit union has routinely charged multiple NSF fees and OD fees on the same transactions, the claim states.

Thompson said in the claim that the bank tried to process a $204.86 payment to PayPal, which was declined due to insufficient funds, and she was charged a $30 fee. Then, without her knowledge and without obtaining a new authorization, Municipal processed the same item again, rejected the item again, and charged Thompson a second $30 NSF fee for doing so (the bank’s fee has now been increased to $32).

Class Action Claims Multiple Overdraft Charges Made by Municipal were ‘Intentional’

The same situation happened multiple times, Thompson alleges, meaning she had to pay significantly more in fees than she believed she owed.

“The improper fees charged by Municipal were not errors, but rather intentional charges made by Municipal as part of its standard processing of items,” the lawsuit states.

Thompson wants to represent anyone wrongly charged OD or NSF fee by Municipal. She is suing for breach of contract and seeks certification of the Class, monetary damages, restitution, declaratory relief, interest, legal fees, and a jury trial.

Municipal isn’t the only bank to face legal action over its charging of fees. In June, Zions was hit with a class action lawsuit for allegedly charging customers $35 overdraft fees, despite accounts having ample money to cover transactions. 

Have you ever been wrongly charged an overdraft or insufficient fund fee? Let us know in the comments section!

Thornton is represented by James J. Bilsborrow of Seeger Weiss LLP, Lynn A. Toops of Cohen & Malad, LLP, J. Gerard Stranch, IV of Branstetter, Stranch & Jennings, PLLC and Christopher D. Jennings of Johnson Firm.

The Municipal NSF Fee Class Action Lawsuit is Thompson v. Municipal Credit Union, Case No. 1:21-cv-07600, in the U.S. District Court Southern District of New York.

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