A recent Community Bank class action lawsuit claims that the financial institution wrongly charges customers overdraft fees even when the account has sufficient funds to cover the transaction.

Community Bank allegedly promises customers that the bank will only charge overdraft fees and non-sufficient fund fees if accounts lack the funds to “cover” a transaction. Despite these assurances, Community Bank is accused of deceptively charging overdraft fees and non-sufficient fund fees in a deceptive manner.

Bank ‘Abuses its Discretion’

When the bank is asked to authorize a transaction, it allegedly authorizes it by cross-checking against the account’s “available balance.” Once approved, the bank deducts the transaction amount from the available balance.

But when these transactions are processed, Community Bank allegedly determines that an account lacks sufficient funds to cover the charge despite having previously sequestered the money to cover it. Customers say this results in unfair fees being levied.

“Despite keeping those held funds off-limits for other transactions, Community improperly charges OD Fees on those APPSN Transactions, although the APPSN Transactions always have sufficient available funds to be covered,” the Community Bank class action lawsuit claims.

According to the Community Bank class action, the financial institution abuses its contractual discretion, which promises to reject attempted transactions “if we feel it is inappropriate to extend credit/cover the transaction.” The bank allegedly pushes through payments for the “sole purpose” of charging overdraft and non-sufficient fund fees.

The Consumer Financial Protection Bureau (CFPB) has taken issue with this practice in the banking industry, calling it “unfair” and “deceptive” in a 2015 document.

“Consumers likely had no reason to anticipate this practice, which was not appropriately disclosed,” the CFPB wrote. “They therefore could not reasonably avoid incurring the overdraft fees charged.”

Plaintiff Charles Kelly said he experienced the issue in June 2019. Community Bank allegedly authorized a DirecTV debit card transaction on May 31, 2019, but Kelly charged an overdraft fee of $35 on June 3, 2019. Community Bank allegedly charged Kelly additional overdraft fees during his attempts to transfer money from his checking account into his savings account.

“However, that transaction was authorized and paid into a positive account balance prior to that day,” the Community Bank class action claims. “Further, at that time of authorization, positive funds were deducted immediately for the debit card transaction on which he was later assessed an OD Fee.”

Community Bank allegedly charges many consumers in this deceptive manner. Kelly claims that these overdraft policies only serve to “maximize” Community Bank’s overdraft fee revenue. He claims that the bank was not satisfied with the “millions” in overdraft fees they collect each year, and “sought millions more” with their unfair practices.

Kelly seeks to represent several Classes of consumers who were charged overdraft fees on transfers or on transactions that did not overdraw their account. He also seeks to represent statewide Classes of the same consumers from Pennsylvania.

The Community Bank Class Action Lawsuit is Kelly v. Community Bank NA, Case No. 8:19-cv-00919-MAD-CFH, in the U.S. District Court for the Northern District of New York.

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.

Learn More

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