Target Hit with Lawsuit Over Store-Branded Debit Cards

Target has been hit with a proposed class action in California that alleges the retail chain deceptively charged “returned payment fees” in connection with its store debit cards.

Target offers store-brand debit cards as an alternative to credit cards and offers a discount for purchases made on the card. According to the suit, however, these cards do not function like traditional debit cards and do not have “overdraft protection” like most bank cards.

The suit says that because these cards work differently, consumers can be “pummeled with unfair and excessive fees” due to a “severe lag time” in Target’s processing of the transactions. This means that, according to the suit, consumers can be charged returned payment fees from Target even when they had sufficient funds in their accounts at the time of their transactions.

The suit claims that consumers expect the transactions to be debited immediately – like they would with a regular debit card. They expect their transactions to be approved if they have sufficient funds or declined if they do not, the suit says. Because Target allegedly delays the processing of transactions, consumers may not have enough money in their accounts by the time the funds are eventually withdrawn.

Consumers are then getting hit with non-sufficient fund fees from their banks “each time that Target attempts and re-attempts to debit the same amount from an account,” the suit claims.

The plaintiff seeks to bring the case on behalf of all consumers who incurred these fees within the applicable statute of limitations.

The case is James Walters vs. Target Corp., United States District Court for the Southern District of California, case no. 3:16-cv-01678-L-MDD.