More and more consumers are reporting being charged overdraft fees on pending transactions, even when they still have enough money in their accounts. Some have turned to litigation, alleging that financial institutions purposely obscure how their overdraft policies work.

If you have been charged unfair overdraft fees by your credit union or bank, such as Union Bank in San Francisco, you may be able to join a class action lawsuit investigation.

Basics of Overdraft Fees

It is common practice for banks and credit unions to offer overdraft protection programs, which are meant to protect customers’ transactions when they would otherwise hit the bottom of their account.

In order to allow the purchase, the bank charges an overdraft fee, which is usually between $25 and $35. One important thing to note about overdraft fees is that they compound, or stack on top of each other with each new transaction that overdraws the account. Compounding fees can mean a consumer quickly racks up a hefty total in overdraft fees.

Of course, overdraft fees most often—and most significantly—affect the most financially vulnerable, as they more consistently have less money in their accounts.

For banks, however, overdraft fees are a lucrative business in and of themselves. Indeed, according to CNBC, Americans paid more than $34 billion in overdraft fees in 2017 alone.

Deceptive Overdraft Fee Practices

Some banks may have deliberately confusing language in their overdraft program policies, making it difficult for customers to tell when overdraft fees will be charged. In many cases, customers may be unaware that they can be charged overdraft fees on pending transactions as well as on transactions that have already gone through.

Indeed, according to a recent class action lawsuit against Digital Federal Credit Union, the DCU overdraft policy is confusing and vague, referring to “available balance” but using it as a term that means “the money in an account minus holds placed on funds to account for uncollected deposits and for pending debit transactions.”

If pending transactions affect the available balance, but customers are unaware, they may unwittingly be hit with one or more unexpected overdraft fees.

Several banks have so far been hit with class action lawsuits over a variety of unfair overdraft fee practices in the last few years. In many cases, these class action lawsuits ended in settlement agreements.

Despite the growing pile of litigation over these issues, some banks and credit unions may still be using unfair overdraft practices in order to wring the most money they can out of their customers.

Allegations of unfair overdraft fee practices have included reordering transactions to charge the highest possible amount in overdraft fees, failing to fully disclose the overdraft program and its fees, not giving customers a method of opting out of the overdraft program, and more.

A number of banks are suspected of charging improper overdraft fees on pending transactions, including Union Bank (based in San Francisco).

Filing an Unfair Overdraft Fee Lawsuit

If you have been hit with unfair overdraft fees, such as overdraft fees on pending transactions from Union Bank or another financial institution, you may be able to join this class action lawsuit investigation.

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.