Patelco Credit Union is one of a number of financial institutions under investigation regarding their administration of overdraft charges.

Serving the San Francisco Bay Area, Patelco was founded in 1936 by employees of Pacific Telephone and Telegraph Company, now known as AT&T, according to the company’s website. Patelco regards itself as one of the biggest credit unions in the U.S. because it holds $6 billion in assets and boasts more than 325,000 members across the country.

Patelco Credit Union members opt to have an Overdraft Protection Plan that could be funded through a Regular Savings Account, Money Market Account, Line of Credit or Patelco Credit Card. The membership information brochure says, “We may assess fees for Overdraft Protection Plan transfers from Regular Savings or Money Market Accounts or for cash advances from lines of credit.”

Settlements Reached Regarding Overdraft Charges

Ent Credit Union based out of Colorado Springs, Colo. reached a class action lawsuit settlement this week in a case that was filed in March. The settlement terms are confidential, but Ent said it includes refunds to members who were impacted by overdraft fees and insufficient funds fees because the errors were caused by a software problem. Ent management said it didn’t realize the software mistakes were being made until they received notice of the lawsuit, according to the Colorado Springs Business Journal.

In a press release, Ent CEO Chad Graves 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 have ever intentionally created. That’s why we are refunding all the fees in question, plus interest, to members affected over the course of the past three years.”

Also on Dec. 2, USAA Federal Savings Bank reached a confidential settlement with Plaintiff Elizabeth Eiess, who alleged the bank broke its contract by charging her several non-sufficient fund fees for a single transaction.

Overdraft Fees: Overview

Overdraft fees are charged to an account when an account holder has opted into their bank or credit union’s overdraft protection program. These services allow a transaction to go through despite a checking account not having enough money.

In some cases, the bank to move money into a checking account to cover an incoming transaction. Money may be moved from a savings account or a related credit account. In other cases, a bank covers the transaction and allows an account to go negative.

Although overdraft protection is a convenient service, it is associated with significant fees. For the service of moving money for a consumer, a bank or credit union will charge a fee. Although these fees vary between financial institutions, the average overdraft fee is $34.

Watching Your Account Balance May Not Help

According to PYMNTS.com, American consumers paid more than $34 billion in overdraft charges in 2017 alone.

In this day of instantly knowing everything by looking it up on your smartphone –from Leonardo DiCaprio’s birth date to the nearest Dairy Queen – many people depend on their phone’s banking app to show them their real-time balance.

The problem with that is you could have payments that are pending that aren’t showing up yet on your online banking statement. For instance, if you made a $50 credit card payment over the phone earlier in the day, that payment might not be posted the same day. When you look online at your account, you need to remember you have $50 less than the amount is showing you.

Still, a Forbes article pointed out that so many different software programs, processing deadlines, and transaction steps are involved in every debit card purchase and ACH payment that it’s no wonder the actual account balance is elusive.

Unfortunately, no amount of watching account balances will work against deceptive bank practices. In consumer lawsuits, many banks and credit unions have been accused of re-ordering transactions in an order that will cause accounts to rack up more than one overdraft fee.

For example, a consumer with $200 in their account may make several purchased. First, they purchase groceries for $60. Then, they purchase a coffee for $5. Later, they make a larger purchase of $150. If the transactions are processed in chronological order, only one overdraft fee charge would be charged for the final $150 transaction. However, if their bank processes the charges based on descending transaction amount, they would be charged two overdraft fees – one for the $60 transaction and one for the $5 transaction.

Consumers who believe that they were wrongfully charged overdraft fees due to deceptive practices may be able to speak to a qualified attorney to see if they are eligible to take legal action. Attorneys are investigating several banks and credit unions due to complaints of deceptive and harmful overdraft practices.

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.

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