Customer reports of deceptive overdraft and non-sufficient fund (NSF) fee structures at banks and credit unions have prompted several investigations and lawsuits aimed at multiple financial institutions, including Patelco Credit Union.

The Consumer Financial Protection Bureau has reviewed customer complaints alleging that banks and credit unions have been raising the fees associated with overdrawn bank accounts, as well as complaints that many financial institutions are processing customer purchases out of their chronological order in a deliberate attempt to collect as many overdraft fees as possible. In addition, consumer rights attorneys have launched their own investigations into several banks and credit unions.

Patelco Credit Union

Based in Pleasanton, Calif., Patelco Credit Union is one of the latest financial institutions to come under scrutiny regarding allegedly unfair banking practices. According to Patelco’s member handbook, the credit union may pay transactions that overdraw the account. When this happens, the credit union issues a “Paid NSF” fee. For debit card transactions, this service requires the member’s opt-in.While it is legal for banks and credit unions to charge overdraft fees, customers are alleging that some institutions are exploiting these fees in order to collect as much money as possible from their customers. Investigations and lawsuits regarding several banks and credit unions allege that transactions are being processed out of order to purposefully hit customers with multiple fees. This is not the first time Patelco Credit Union has made the news. In 2017, a teller at Patelco was sentenced to two years and seven months in federal prison for using her position at the credit union to embezzle more than $400,000 from elderly customers.

What are Overdraft and NSF Fees?

Overdraft fees and non-sufficient fund fees are fees assessed by a bank or a credit union when a customer attempts to make a purchase without enough money in their account. In the case of Patelco, no fee is assessed when the bank transfers money from another one of the customer’s accounts to cover the purchase being made with an insufficiently funded account. However, if there is no second account from which funds can be transferred, an NSF fee may be applied to the customer’s account. Many banks and credit unions reserve the right to process customer transactions out of order, meaning that multiple unexpected overdrawn or NSF fees may be assessed.For example, if a customer has $20 in their account at the beginning of the day and buys a $5 coffee, a $10 lunch, and a $30 dinner, they may expect the bank to process these transactions in the order they occurred and only receive a single overdraft fee on the final $30 charge. However, if the bank processes the transactions in reverse order, the customer will receive a fee for each of the three purchases. According to Forbes, these overdrawn account fees netted banks and credit unions more than $34 billion in 2017.If you have had your purchases processed out of order by your bank or credit union and have been charged multiple overdraft or NSF fees because of this banking practice, you may qualify to join a free investigation.

You may have a legal claim if your were charged excessive overdraft fees by one of these banks or credit unions:

• Alliant Credit Union
• Astoria Bank
• BECU (Boeing Employees Credit Union)
• Nationwide
• Pacific Western
• Patelco Credit Union
• State Employees Federal Credit Union (SEFCU – New York)
• Sterling Bank
• Educational Employees Credit Union (California)

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