A new lawsuit has been filed by two New York State residents concerning credit union overdraft charges levied by State Employees Federal Credit Union.

This class action legal claim was registered in a federal court in New York by plaintiffs Christopher Sotir and Jenny Randall, who seek to represent themselves individually and others who they claim have unfairly been assessed credit union overdraft charges by this institution.

The plaintiffs in this legal claim allege that the credit union overdraft charges are levied in a fashion which is in opposition to the contract they have with their members. Both plaintiffs allege they were improperly charges overdraft fees while they still had a positive balance in their accounts. This they blame on SEFCU’s policy of assessing overdraft fees on an artificial balance that accounts for transactions that have not yet posted to the account, rather than on the actual balance of funds that are in the account.

Additionally, the institution purportedly misrepresents its overdraft protection program to its patrons. The plaintiffs claim SEFCU uses confusing terminology that confounds overdraft fees with NSF fees.

According to Nerd Wallet, an overdraft charge is the fee that a bank or credit union will assess when it pays a transaction on a member’s behalf even though the member’s account does not have enough money to cover the transaction. An overdraft fee is different from a non-sufficient fund fee (NSF). The NSF fee is levied against a patron of a financial institution when the bank declines to pay the transaction and returns the check or the automatic clearing house (ACH) payment back to the payee.

In the factual allegations section of the SEFCU lawsuit, it indicates that this nomenclature is the norm for the financial industry, but that this credit union use the two terms interchangeably or even in a reversed fashion leading to confusion on the part of customers.

The Consumer Financial Protection Bureau says that credit union overdraft charges may not be assessed against the consumer for ATM or debit transactions unless the credit union customer has agreed to opt into the credit union’s overdraft protection service. Without signing an opt-in agreement, often presented at the time of opening an account, purchases and withdrawals will most likely be declined if funds are too low when the effort is made.

The SEFCU lawsuit claims that credit union overdraft charges—like those of banks—are a major source of revenue that created $37 billion dollars in profit for financial institutions in the year of 2009 alone. It also remarked that despite their reputation for being more customer focused, credit union overdraft charges are rarely lower than those of mainstream banks.

Sotir and Randall argue that SEFCU has breached their contract with them. They believe that there are many other credit union members that have been subjected to this breach in a similar fashion. They are seeking compensatory damages and restitution of all funds taken unjustly with interest. They hope for recognition of their action as a class action and a return of all attorney and court fees.

The SEFCU Lawsuit is Case No. 1:19-cv-00147-GLS-CFH in U.S. District Court for the Northern District of New York.

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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