PenFed Credit Union Facing Lawsuit Regarding Alleged NSF Bank Fee Irregularities

Two customers of Pentagon Federal Credit Union have filed a class action lawsuit alleging the credit union violated its own rules when it charged more than one NSF bank fee per rejected transaction.

Plaintiffs Nyjah Ross and Thomas Castelli filed the lawsuit, claiming Pentagon Federal charged multiple NSF fees for the same electronic transaction or were charged NSF fees when they had enough money sitting in their accounts to cover the transaction.

Pentagon Federal charges a $30 NSF fee when an electronic item is first processed for payment and the credit union determines not enough money is in the account to cover the transaction. Pentagon Federal allegedly charges an additional NSF fee when the identical item is presented for processing again even though the account holder took no action to resubmit the transaction.

The NSF fee lawsuit alleges the second NSF fee is in violation of Pentagon Federal’s own account agreement, which indicates “a fee will be assessed for non-sufficient funds” and does not say any more than one fee will be assessed. By submitting a single electronic transaction more than once does not make the transaction a new or different item, which means a subsequent fee or fees would not be valid, claims the lawsuit.

Plaintiffs Ross and Castelli recognize that other financial institutions charge more than one transaction fee due to the resubmission of the same transaction, but these other credit unions clarify that the fees are “per presentment.”

For example, USE Credit Union explains, “Fees are charged per presentment, meaning the same item is subject to multiple fees if presented for payment multiple times.”

NSF Bank Fee and Regulation E

NSF fees and electronic fund transfers are covered by Regulation E, which implemented the Electronic Fund Transfer Act. The Consumer Financial Protection Bureau explains Regulation E includes rules regarding disclosure, error resolution and electronic fund transfers. Regulation E requires financial institutions obtain affirmative consent before being permitted to assess overdraft fees against customers’ accounts through an overdraft program for ATM and non-recurring debit card transactions.

Ross and Castelli allege that Pentagon Federal violated Regulation E because the company purportedly failed to receive their informed consent to charge overdraft fees on non-recurring debit card and ATM transactions. The lack of disclosure was an alleged violation of Regulation E.

The NSF bank fee lawsuit consists of three proposed classes:

• The Repeat NSF Class includes all U.S. residents who have or who have held accounts with Pentagon Federal and were charged more than one NSF fee for the same item during the last five years.
• The Account Balance Class includes all U.S. residents who have or who have held accounts with Pentagon Federal and were charged an overdraft fee or NSF fee when there was an adequate balance in the checking account to cover the item during the last five years.
• The Regulation E Class includes all U.S. residents who have or who have held accounts with Pentagon Federal who was charged an overdraft fee or overdraft fees for ATM or non-recurring debit card transactions during the period of time starting Aug. 15, 2010, and ending on the date the class was certified.

Pentagon Federal Credit Union, also known as PenFed, reported total assets of more than $24 million in its 2018 annual report.  Headquartered in McLean, Virginia, Pentagon Federal was organized and chartered on March 25, 1935 as a federal credit union and its members share an affiliation with the U.S. defense sector.

The NSF Bank Fee Lawsuit is Nyjah Ross, et. al., v. Pentagon Federal Credit Union, et. al., Case No. 1:20-cv-00281-RDA-JFA, in the U.S. District Court for the Eastern District of Virginia, Alexandria Division.

Join a Free NSF Fee Class Action Lawsuit Investigation

You may qualify to join this NSF fee class action lawsuit investigation if you were unfairly charged NSF fees by one of these banks:

• Bancfirst
• Bell Bank
• Busey Bank
• Center Bank
• CenterState Bank
• Flagstar Bank
• Glacier Bank Wings Federal Credit Union
• Midwest One
• NBT Bank

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