A growing number consumers are reporting that their banks use deceptive overdraft protection practices used to wring yet more money out of their customers. Several banks and credit unions are currently being investigated for potentially improper overdraft practices, including SEFCU of New York.

If you have been charged excessive overdraft fees because of deceptive SEFCU overdraft protection practices, you may be able to file a lawsuit and pursue compensation.

Deceptive Overdraft Practices

Overdraft protection programs are presented as being for the consumer’s benefit, protecting them from being unable to make a transaction when they overdraw their account. But banks and credit unions bring in billions of dollars every year from overdraft fees alone, and some have been accused of engaging in deceptive practices to ensure that they maximize their profit.

New York’s SEFCU, or State Employees Federal Credit Union, is one of the financial institutions being investigated for potentially engaging in unfair overdraft practices.

There are a number of ways that overdraft protection may be used to generate fee revenue. Banks may convince consumers into signing up in the first place without adequately disclosing the terms of the service, or they may unfairly raise fees, or even reorder customer transactions in order to trigger extra charges.

Financial institutions may process transactions out of the order in which they were made, and instead process from highest to lowest. This maximizes the amount of overdraft fees that a bank can charge, because with higher transactions processed first, the account gets depleted sooner, which means that each and every one of the smaller transactions that follow would charge another overdraft fee.

Some lawsuits further allege that banks would allow customers to constantly overcharge the available balance in their checking accounts, regardless of having insufficient funds, ultimately bringing in extra overdraft fees.

SEFCU was hit with a class action lawsuit last year that challenged a number of SEFCU overdraft protection practices, including assessing overdraft fees based on the account’s available balance instead of its actual balance.

Essentially, the lawsuit claimed, the credit union would authorize an electronic transaction, reducing the available balance without actually removing the funds from the account. When an unrelated transaction was made that once again lowered the available balance—this time pushing it below zero—the customer would be charged an overdraft fee, even though the actual balance was still positive.

Banks and credit unions that are currently under investigation for potentially engaging in these and other deceptive overdraft practices include:

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

Filing a SEFCU Overdraft Protection Lawsuit

If you were affected by unfair SEFCU overdraft protection practices or practices at another bank or credit union, you may be able to file a lawsuit. A lawsuit may be able to help compensate for unfair overdraft fees and other damages.

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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