One of the largest credit unions in New England has been targeted in a a class action overdraft fee lawsuit filed by plaintiffs claiming breach of contract.

The original complaint was filed in June 2018 by plaintiff Brandi Salls on behalf of herself and other customers who have said that defendant Digital Federal Credit Union failed to make its overdraft fee policies clear.

Digital Federal Credit Union, headquartered in the Boston suburb of Marlborough, was founded in 1979. With over 700,000 members throughout Massachusetts and New Hampshire, DCU has approximately $8 billion in assets.

The Complaint

Salls states that she was charged overdraft fees even when her account had sufficient funds to cover the transactions in question, including “pending transactions.” In his denial of DCU’s motion for dismissal, U.S. District Judge Timothy S. Hillman noted that credit union’s overdraft policies were confusing.

Referring to the institution’s own policies, Judge Hillman wrote, “The overdraft disclosure does not provide any information clarifying that ‘enough money’ is to be construed as ‘available balance.’ Therefore I find that a reasonable person could construe ‘enough money’ to mean ‘ledger balance.’”

DCU’s Response

In a motion filed in September to have the overdraft fee lawsuit dismissed, DCU argued that its opt-in agreement clearly explains how and when overdraft fees are assessed against a customer’s “available balance.” They claim that the term is widely understood as “the money in an account minus holds placed on funds to account for uncollected deposits and for pending debit transactions.”

However, Judge Hillman found that terms in the disclosure required more definition to avoid confusing members.

Overdraft Fee Lawsuit Causes of Action

DCU is only one of numerous banks and credit unions that have been accused of deceitful and misleading practices in how overdraft fees are assessed. Because fewer consumers have been overdrawing their accounts in recent years, some institutions have been raising overdraft fees and have engaged in questionable practices, such as processing transactions out of sequence, so as to trigger such fees.

The Consumer Financial Protection Bureau has shelved plans for new regulations that would rein in these practices. For now, customers who have already been hit with unreasonable fees have little choice but to turn to the courts for a remedy.

While every overdraft fee lawsuit is slightly different, they all share one thing in common: consumers being charged fees in an allegedly improper manner. In some cases, this is because the institution is unclear in its contract as to how such fees are calculated and assessed. Many plaintiffs say that their banks or credit unions process their transactions out of order so as to be able to charge the maximum amount in overdraft fees. Other complaints say the defendants would also allow customers to overdraw their accounts multiple times, even when there were insufficient funds – thus multiplying the number of fees they could charge.

Salls’s Class Action Overdraft Fee Lawsuit is Case 4:18-cv-11262-TSH, U.S. District Court, District of Massachusetts.

If you were charged unfair overdraft fees by your bank or credit union, you could be eligible to participate in a FREE class action lawsuit investigation. If you qualify, an attorney will contact you to discuss the details of your potential case at no charge to you.

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