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Credit Union Excessive Overdraft Fees

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Credit unions are not-for-profit organizations run cooperatively by members. They are different from banks in how they are run, but may still face many of the same legal issues as banks, including claims about mismanagement, consumer fraud and overdraft fees. Credit union lawsuits can be filed by members whose credit unions have not been properly managed or they may be filed by the National Credit Union Administration (NCUA), which has regulatory responsibility over them.

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Credit Unions and Banks

paperchainbanking Banks are for-profit institutions owned by a small group of individuals. Credit unions are actually not-for-profit organizations owned by their members. They may be chartered by federal or state governments. Federal credit unions are governed by the Federal Credit Union Act. In addition to being regulated by the NCUA, all credit unions are insured by the National Credit Union Insurance Fund.

The purpose of a credit union is to serve members, rather than to maximize profits. Surplus profits made by credit unions are paid to members as dividends. Account holders elect the board of directors and have a say in how the credit union is run. What most members notice, though, is that credit unions offer lower fees than banks.
 

Credit Union Lawsuits

Although credit unions are run cooperatively, they can still face lawsuits for mismanagement of funds, failing to disclose fee structures or other improper practices. In recent years, credit unions have been sued for director and officer mismanagement, deposit and withdrawal issues, wrongful foreclosure and employment, and training matters.

In 2017, a fair housing organization claimed that Colorado-based, Bellco Credit Union discriminated against women by denying them mortgages because they were on maternity leave. At about the same time an employee who had worked for 15 years for Park Community Credit Union sued, alleging that she was harassed and ultimately fired because she is gay.

New York Attorney General Eric T. Schneiderman filed suit against Southeast Financial Credit Union and The College Network alleging students who were given student loans for programs run through The College Network were not told their student loans were through a credit union.

The bulk of account holder-driven litigation, however, appears to focus on credit unions’ unfair practices with respect to overdraft fees. Account holder’s rights are protected by a variety of consumer protection laws.
 

Credit Union Overdraft Fees

creditunionMuch like banks, some credit unions have been hit with overdraft lawsuits, alleging their practices associated with overdraft fees are not properly disclosed. Among allegations made against credit unions are that the fees are based on available balance, not actual balance, the fee structures are not clearly disclosed and members do not receive accurate information about their available balances. For some credit union members, the confusion reportedly involves holds on debit transactions, which are not always made clear to members.

Credit unions have also faced allegations that they improperly reordered transactions to maximize income from overdraft fees. In July 2017, Florida-based MidFlorida Credit Union agreed to pay $2.375 million to settle a class action lawsuit regarding its overdraft fee practices.

As many as ten other credit unions were reportedly under investigation for deceptive overdraft fee practices as of June, 2017, only the month before. Among these were Meriwest Credit Union, Pentagon Federal Credit Union and Boeing Employees Credit Union.

Another class action lawsuit claims that Landmark Credit Union illegally assessed overdraft fees on transactions when there was enough money in the checking account to pay for the transactions.

In 2015, Orange County's Credit Union reportedly agreed to pay $1.8 million to settle complaints about unlawful overdraft fees.
 

Credit Union Excessive Overdraft Fees Legal Help

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CREDIT UNION EXCESSIVE OVERDRAFT FEES LEGAL ARTICLES AND INTERVIEWS

Earnin Agrees to PayBack
Earnin Agrees to PayBack
August 30, 2020
Santa Clara, CA A proposed settlement by Earnin, an app-based pay advance service, would theoretically pay up to $12.5 million to consumers who claim they were misled by Earnin and were charged bank fees they weren’t aware of before signing on with the service READ MORE

USB Checking Accountholders to get their Day in Court
USB Checking Accountholders to get their Day in Court
August 17, 2020
San Diego, CA On August 10, the Southern District of California agreed to reconsider its own ruling in an overdraft fees lawsuit that forced the dispute into arbitration. On reconsideration, it reversed itself. This breathes new life into Reyna McGovern’s contention that U.S. Bank charged bank overdraft fees that were not permitted under the terms of the account agreement that she and many other customers signed. Now they get a chance to have their claims heard in court. The Order Granting the Motion for Reconsideration may have implications for other Californians who, perhaps unwittingly, signed arbitration agreements when they opened a checking account.

READ MORE

California Excessive Bank Overdraft Fee Lawsuit Gets Second Wind
California Excessive Bank Overdraft Fee Lawsuit Gets Second Wind
July 29, 2020
San Diego, CA For months, the law firms that represent banks and other big businesses have worried that the Ninth Circuit’s 2019 decision in Blair v. Rent-A-Center shows plaintiffs how to side-step mandatory arbitration provisions that include class action waivers. Defense counsel’s worst fear is realized in the motion for reconsideration filed in McGovern v. U.S. Bank, a California bank overdraft fees lawsuit. 
READ MORE

READER COMMENTS

Posted by

on
How do I get on this as a claimant? I wish there was another bank to go to but they all are lousy! Other than "under the mattress" banking there is no where to turn.

Posted by

on
I worked for Landmark credit Union and I can 100% say they are some shady mo-fos. Body shamed by the male vp of the dept I worked in was the last tipping point of me leaving.I can absolutely believe they illegally obtained money from members. Bleed them dry of their 3bill in assets folks. I supports your movement for justice and change.

Posted by

on
I am with Orange County’s Federal Credit Union and until now they have been on their best behavior. I have received my direct deposits a day before the pay date to ensure the money is part of my actual balance by midnight when any transactions come through. Now, the last few direct deposits have not come in on the day before. I can only surmise that they are heading down the same path of not depositing the money when they receive it so they can, again, charge overdraft fees. Not sure how to combat this other than to take my banking elsewhere.

Posted by

on
Where can I find an attorney to file a lawsuit against a credit union in Massachusetts.

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