An overdraft lawsuit filed in March against a Colorado Springs credit union has been settled. Though the terms of the agreement are confidential, the Colorado Springs Business Journal reports that Ent Credit Union issued a press release stating that it would refund customers who were wrongly charged overdraft fees and insufficient funds fees (NSF fees).

Case Background

Lead plaintiffs Stephanie N. and Ashley B. claimed that they had been charged overdraft fees on transactions that did not, in fact, overdraw their accounts. The women also claimed they were charged up to three NSF fees ($25.00 each) on a single transaction. Their complaint stated that Ent “misleadingly and deceptively misrepresents each of the above practices, including in its own account contracts,” while failing to disclose “material facts” and violating the terms of its own contracts.

Specifically, the plaintiffs said Ent charges overdraft fees by doing something the lawsuit characterized as “Authorize Positive, Purportedly Settle Negative Transactions,” or “APPSN Transactions.”

When debit card transactions were authorized on accounts with sufficient balances, the credit union would immediately deduct the amount and place it in a reserve account. As a result, the customer’s “available balance” reflected the balance after the transaction was debited. Because the funds are held in reserve to cover the purchase, the account should always have enough to cover subsequent transactions. But, the suit claimed, the credit union continued to assess overdraft fees through its APPSN transactions.

This is a practice that the Consumer Financial Protection Bureau has labeled unfair and deceptive. The plaintiffs say there was “no justification” for the fees beyond maximizing the defendant’s overdraft fee revenue and could have simply rejected subsequent transactions or charged fees on transactions that actually do cause accounts to be overdrawn.

A Computer Glitch?

Ent Credit Union claims that the improper fees were the result of unidentified “software issues” of which it had no knowledge until the complaint was served. CEO Chad Graves apologized to affected members, and said, “While we believe our member agreement allowed for the charges in question, the way the fees were assessed isn’t consistent with our values, nor were they policies we would ever had intentionally created.”

According to the bank, the problem was twofold: First was a “default hold setting” in the system software that ran electronic transactions. Because of this, debit card transactions authorized by a customer signature without entering a personal identification number (PIN) triggered a “courtesy pay” fee even if the account in question had a sufficient balance at the time. The other factor was connected to merchants attempting to withdraw payment multiple times, potentially triggering multiple fees for one transaction. Ent has now changed both processes in order to eliminate the problem, while its IT staff will be combing through data in order to identify all accounts that were affected.

Overdraft Lawsuit Filings and Available vs. Actual Balances

The issue of “available” balance as opposed to actual balance is a frequent cause of action in overdraft lawsuits, as is processing transactions out of order (though this does not appear to have been the issue in the Ent overdraft lawsuit). Consumers can avoid this situation by “opting out” of overdraft protection, according to Forbes.

This Overdraft Class Action Lawsuit is Case 1:19-cv-00634, U.S. District Court for the District of Colorado.

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.