A Michigan man has filed a lawsuit against his credit union, claiming that the union routinely assesses unfair debit card overdrafts for transactions that have not overdrawn members’ accounts.

Credit Union One Debit Card Overdrafts Lawsuit

Plaintiff David T. filed his lawsuit against Credit Union One in August 2020 regarding what he claims is an unfair and unjust overdraft charge policy. Credit Union One is a Michigan-based credit union with over $1.5 billion in assets.

According to David, Credit Union One assesses unfair and predatory overdraft fees that go against the financial institution’s own fee policies. He claims that the credit union habitually charges these fees even when consumers have not actually overdrafted their account.

David claims that the wording in Credit Union One’s contract with members states that the credit union will only charge overdraft fees when a customer attempts to make a transaction and does not have enough money in their account to cover the cost. However, he claims that the credit union has violated these terms by charging him and other consumers debit card overdrafts on purchases they have the money for, and that the way the credit union moves around members’ money may be to blame.

David alleges the way that these unfair overdraft fees are assessed follows a crooked path. When an account holder with the credit union attempts to make a purchase, Credit Union One immediately reduces the balance in their account by the amount of the transaction. This money is then held in a separate account until the transaction is processed, and the available account balance shown to the member is immediately updated to reflect the new, lower amount. This way, the money to cover the cost of the purchase is immediately unavailable for the member to spend, and available for the credit union to process.

However, according to David’s lawsuit, these transactions are often not processed until days later.

If the customer incurs an overdraft fee on any purchase made after the initial purchase was made, but before the initial purchase has been processed, Credit Union One allegedly assesses an overdraft fee for both purchases. David says that these fees are unfair and deceptive, as they are assessed despite having an adequate amount of money already set aside to cover the cost of the purchase.

He claims that rather than comparing the cost of the initial purchase to the amount of money immediately set aside to cover the transaction, the credit union compares the cost of the purchase against the current account balance, which was already updated to reflect the transaction. If this current account balance is lower than the cost of the purchase, an overdraft is assessed.

David says that this habitual practice of charging customers improper overdraft fees has resulted in profits of millions of dollars for the credit union. Additionally, he claims that the sole reason for these fees is to increase profits for the financial institution.

The practice of assessing unfair overdraft fees may also be a widespread problem. Overdraft fees bring in close to $12 billion in profit for big banks and credit unions each year, which may incentivize them to continue to charge them. Banks such as Washington Federal and Umpqua Bank are just a few others accused of this overdraft fee practice.

Although it is legal for banks and credit unions to charge fees when customers overdraft their accounts, many consumers have recently filed lawsuits against these financial institutions claiming that the fees are charged inappropriately, or that multiple fees have been assessed for the same purchase. Some banks have settled these claims as well.

If you believe you have been assessed unfair debit card overdrafts, you may be able to speak with an experienced attorney about the legal options available to you. Some victims of unfair or predatory overdraft fees may be eligible to join or file a class action lawsuit against their bank or credit union.

David’s Credit Union One Lawsuit is Case No: 2:20-cv-12318-PDB-EAS, filed in the U.S. District Court for the Eastern District of Michigan.

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If you were charged overdraft fees or NSF fees by your bank or credit union that you believe are improper for any reason, the attorneys who work with Top Class Actions are ready to investigate these fees on your behalf. Learn more by filling out the form on this page.

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This article is not legal advice. It is presented
for informational purposes only.