A man from Illinois recently filed a class action overdraft fee lawsuit, alleging Citizens Equity First Credit Union (CEFCU) had violated federal overdraft protection law and their own policies.

This class action overdraft fee lawsuit alleges CEFCU charged improper overdraft fees to customers’ checking accounts even though they had sufficient funds to cover their purchases.

CEFCU reportedly has over 330,000 members, who joined the credit union for typical purposes but who may, according to the plaintiff, be experiencing serious overdraft abuse.

Plaintiff Julian H. alleges violations of the credit union’s own contract terms, which allegedly state an overdraft fee should not occur if the account balance is not negative. According to the class action overdraft fee lawsuit, Julian and other customers have been charged unfair overdraft fees they should not have incurred.

One of the transactions at issue allegedly occurred on Aug. 30, 2017, in which Julian reportedly incurred three overdraft fees in the amount of $30 for three debit card transactions. Two of those transactions allegedly cleared his account days before, and therefore should not have incurred overdraft fees.

CEFCU Overdraft Policy

Julian’s checking account agreement with CEFCU, like services at other banks and credit unions, covers overdraft fees. He says his agreement states that the credit union will charge overdraft fees only if the account has insufficient funds to cover the transaction.

According to Julian, CEFCU also says that “available balance” is used to determine whether or not overdraft fees will incur, and that “available funds” are reduced for holds including those placed immediately on debit card transactions. In addition, CEFCU’s terms allegedly say that merchants will often call them for authorization, which means the credit union has full control over whether or not a transaction goes through and if an overdraft fee is needed.

With these provisions of the Deposit Agreement, CEFCU is supposed to use the available balance, which is the same balance that is immediately reduced by debit card transactions, to determine whether or not an overdraft occurs.

Julian alleges CEFCU violated its own overdraft terms when charging these fees, and that the credit union deliberately left the terms “to pay” and “to cover” ambiguous in order to manipulate the amount of funds that may or may not be available after the transaction in question.

He claims CEFCU charged overdraft fees regardless of available funds. He believes numerous other customers may have had similar experiences. He and other proposed Class Members are seeking damages for these allegedly unfair charges.

This Class Action Overdraft Fee Lawsuit is Case No. 1:19-cv-01040-JES-JEH, in the U.S. District Court for the Central District of Illinois, Peoria Division.

Overview of Overdraft Protection

Overdraft fees are incurred when a credit union or bank covers a transaction that would otherwise overdraw a customer’s account. The fee covers the costs and an activity charge for the bank.

While overdraft protection was initially supposed to help customers avoid embarrassing instances of card decline, the practice of overdraft fee abuse has reportedly become increasingly common. Financial institutions have been accused of violating their own agreements, reordering transactions, and numerous other practices to maximize fees and pad their profits.

New regulations were enacted on Aug. 15, 2010, after a growing number of financial institutions allegedly signed customers up for overdraft protection without their consent, resulting in numerous overdraft fees.  Overdraft protection law requires customers opt in before issuing overdraft protection for ATM and one-time debit transactions.

If you were charged unfair overdraft fees by your bank or credit union, you could be eligible to participate in a FREE class action lawsuit investigation. If you qualify, an attorney will contact you to discuss the details of your potential case at no charge to you.

Fill out the form on this page now for a free, immediate, and confidential case evaluation.

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