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Credit Unions Not Immune to Charging Excessive Fees: Attorney

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Washington, DCIt should come as no surprise that in an era of low interest rates, banks pick up the slack in terms of revenue diminished by the low rate environment by focusing more on fees charged to their clients. Fees include overdraft fees, and many an Excessive Overdraft Fees Lawsuit has focused on an all-too-common practice of re-ordering overdrafts in an attempt to increase fees.

Writer Halah Tourvalai, writing in Forbes Investing (6/11/13), provides the following example:

“Say you’re a student with $50 in your account,” Tourvalai writes. “You make three consecutive purchases for $10 each. That leaves you with $20, but you still need to buy a $40 book for class that evening. You decide to swipe your debit card anyway under the assumption you’ll be charged a $35 overdraft fee just once.

“Since most banks will process largest to smallest transactions the $40 book is deducted first leaving the student with $10, then the three $10 transactions are deducted. That would allow the bank to collect an overdraft fee two times, instead of one.” Or a $70 fee, instead of $35.

Here’s the thing - banks aren’t the only institutions capable of charging excessive overdraft fees. Smaller community banks and credit unions also charge overdraft fees and according to a report highlighted by The Washington Post in 2013, overdraft rates at the credit union level may be rising at a faster pace.

A report by Moebs Services, released July 8 of 2013, noted at the time that while the big banks were holding the line on overdraft fees at about $30 per transaction for the four years leading up to 2013, credit unions had increased their fees from $25 to $28 over the same period of time. While median overdraft fees remain lower at credit unions and community banks than the larger banks, they appeared to be rising at a faster pace than their commercial counterparts.

There has been much angst amongst consumers in recent years over excessive bank fees, and the frustration can extend to the credit union as well. And while many a plaintiff has taken legal action over the practice by some banks of re-ordering transactions in an effort to charge a higher fee (or series of fees), in the end a bank or credit union can only charge fees that are entrenched in fee agreements and contracts.

Most Americans don’t read the fine print. One attorney believes Americans should be and should remain vigilant as to the fees they are being charged to ensure the fees are proper.

“Not all overdraft charges are improper,” says Taras Kick, of The Kick Law Firm APC, in comments made to LawyersandSettlements’ Heidi Turner. “Some are proper. But some overdraft fees are improperly charged. If someone has overdraft fees from a credit union or small bank, they should look into it, because they may be right. It’s worth investigating.”

Of interest is Regulation E under the auspices of the Consumer Financial Protection Bureau that came into effect at about this time in 2010 - five years ago. To wit, Regulation E holds that it is illegal for a commercial bank, community bank or credit union to charge overdraft fees on a non-recurring debit card transaction unless the client has specifically opted in to overdraft protection for such purchases. A recurring purchase is typified as a bill payment or some other transaction that reflects a certain transaction pattern. Buying groceries using a debit card on the odd occasion should not trigger an overdraft fee provided the consumer has not opted in to overdraft protection for such purchases, and provided such transactions are few and far between.

Having said that, if an overdraft fee appears to come out of nowhere and worse is not reflected in your contract agreement documentation with the credit union, then a Credit Union Excessive Overdraft Fees Lawsuit might be in order.

It’s worth talking to an attorney. That’s because credit unions, which are membership-driven and have different operating structures than commercial banks, are nonetheless subject to the same financial pressures stemming from the 2008 recession, according to The Washington Post (7/8/13). Like the big banks, credit unions have suffered high losses on loans. Bill Hampel, chief economist at the Credit Union National Association (CUNA), noted in The Washington Post that such conditions are probably contributing to increases in overdraft fees.

At the end of the day, it’s important to know what you’re being charged…

READ ABOUT CREDIT UNION EXCECESSIVE OVERDRAFT FEES LAWSUITS

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READER COMMENTS

Posted by

on
Ok, they got me too. Union bank. I overdrawn my account at the grocery store. Ok no biggie went the next day to cover it and was shocked. They had rearranged my debits already posted(no pending) for the last 10 days and rearranged them to get 3 OD. I was floored! I didn't recognize my statement. My pharmacy charges posted on the 20th was moved to the 24th. Along with 10 others transactions . So now instead of 1 OD I have 3 and still overdrawn. AND THAT WILL COLLECT FEES EVERY 5 days.

Posted by

on
I bank at eastment i askd them to stop payment and she said sry i cant with out you being in the positive cuz the 30 dollors comes out of ur account. I said thats funny cuz ur charging me 60 cuz they run ot 2 times i paid 3overdrafts a week and sometimes 5 i have been in overdraft for 6weeks stright500 to 800 a month in iverdraft im lossing my car and my home i mean i have direct deposit iverdraft pertection. They do pull the bigges first. Help me anyone

Posted by

on
Does anybody know how far you can go back on a bank that did this to you? We closed are bank account and went with a Credit Union because our bank was charging us for everything. It didn't solve the problem because our Credit Union is doing the same thing.

Posted by

on
Bethpage Federal Credit Union charges excessive fees for overdraft, and does just what the banks did - reorder deposits, charge three separate fees for one overdraft, accept a debit charge and then charging me for overdrafts, for the past several years!
Is there any relief for this outrage?

Posted by

on
My credit union accepted 3 different checks dating oct.23rd,28th and 31st..my balance reflected these deposits totaling2455.00 and on nov.10th I was overdrawn 2132.82. Should they have deposited these checks before they found out none were good? All were returned for insufficient funds. Why would they let muse that money? I feel like I was setup to fail.

Posted by

on
My bank charges three charges for one transaction. One is the overdraft fee another is for the fee the ATM charges and the last is the 1.50 the bank charges for not using their ATM. So 90 for overdrawing one transaction at ATM. Is this legal. I bank with Altana with in Billings MT.

Posted by

on
why is it that the credit union states it is required to deposit a check written to me prior to cashing it.....someone wrote me a ck i wanted to cash it and they demanded to place in my account first?

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