Are Trustco Bank Overdraft Fees Legal?

Trustco Bank may charge bank overdraft fees to consumers who opt into overdraft protection, though they are required to follow financial regulations.

What Are Overdraft Fees?

Overdraft fees are charged by banks to consumers who have enrolled in overdraft protection programs. By enrolling in these programs, consumers are able to complete transactions which would otherwise overdraft their accounts. Instead of rejecting a transaction, a bank allows an overdraft protected account to go negative or transfers funds to cover a transaction from a linked savings account or line of credit.

However, in return for this service, consumers are charged significant fees. Average overdraft fees around the country run at $34 per charge.

Overdraft fees represent a significant portion of profits for banks and credit unions. According to research from the Center for Responsible Lending, big banks reportedly charged over $11 billion in overdraft fees in 2019.

Unfortunately, many of these fees may be charged to the same account holders. Research reportedly shows that 9% of account holders are charged 84% of the fees from big banks. These accounts may belong to vulnerable households who average low account balances of less than $350 and have low monthly deposits.

Multiple fees can quickly add up to thousands of dollars against already at risk consumers. One credit union surveyed by the Center for Responsible Lending showed that 60 of their around 10,000 members were charged between 50 and 214 overdraft fees over the course of a single year. Even with a low estimate of $20 per fee, that’s between $1,000 and $4,280 in overdraft fees in a single year.

Based on the significant impact of overdraft fees on consumers, the Center for Responsible Lending penned a report in June warning that these fees could lead to widespread financial harm – especially during the ongoing coronavirus pandemic.

“Periods of under- and unemployment could cause unprecedented financial strain, potentially leading to unprecedented volumes of overdrafts,” the Center for Responsible Lending notes. “These fees will make many families’ already desperate financial situations only more dire.”

Which Overdraft Fees Does Trustco Bank Charge?

Trustco Bank is a New York bank which has been operating since 1902. Since its first days on the financial scene, Trustco has expanded to open 148 brand locations – 53 of which can be found in Florida. Other locations may be found in Massachusetts, New York, New Jersey, Vermont, and more.

According to Trustco Bank’s general account disclaimer, the bank will charge overdraft fees on purchases which overdraft an account if consumers have opted into overdraft protection. After this, overdrafts must be paid “immediately and without notice or demand.” For multiple overdraft transfers from a line of credit, Trustco Bank may limit the number of overdrafts allowed. For all overdrafts, Trustco Bank limits the amount allowed to the overdraft protection available credit limit.

Although the bank’s general disclosure does not list exactly how much each overdraft fee is, consumers can reference their fee schedule for this information. On average, overdraft fees may run around $35.

Are Overdraft Fees Legal?

Overdraft fees are legal under financial regulations only if consumers have opted into overdraft protection offered by their bank or credit union.

In 2010, the Federal Reserve issued a new overdraft rule which makes it so that banks cannot automatically enroll their consumers in overdraft protection. Instead, banks are to default to rejecting transactions which exceed an account’s funds. Under the law, financial institutions can only charge overdraft protection fees if their customers have opted in to such programs.

Unfortunately, there are no laws which govern how many overdraft fees a bank can charge or in which situations they are allowed to charge these fees. Although the law does not set these guidelines, banks have faced legal action over deceptive overdraft fee conduct.

In some overdraft fee lawsuits, consumers argue that banks have violated their own contract terms by charging multiple overdraft fees on the same transaction or reordering transactions to maximize fees. By violating their account agreements, these banks and credit unions have allegedly violated unfair business practice laws.

Can I File A Trustco Bank Overdraft Lawsuit?

Attorneys are investigating several banks for potential overdraft fee misconduct, including:

• Valley National Bank.
• Bethpage Federal Credit Union.
• Wings Financial Credit Union.
• Lake City Bank.
• Kearny Bank.
• Trustco Bank.

If you are a customer of one of these banks and have been charged unfair overdraft fees or NSF fees, you may be eligible to take legal action. A qualified lawyer can review your case to determine your eligibility to file a class action lawsuit and seek compensation for unfair fees.