1st Advantage Federal Credit Union Charges Multiple Fees On a Single Item, Class Action Alleges

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A proposed class action alleges 1st Advantage Federal Credit Union illegally and deceptively stacks multiple fees on a single transaction that’s been rejected for insufficient funds.

The 17-page lawsuit claims that the credit union has taken to assessing two or more $30 insufficient fund (NSF) fees, or an NSF fee followed by an overdraft fee, on only one electronic payment item, ACH item or check. The complaint contends that 1st Advantage “maximizes its already profitable fees” by reprocessing an item it rejected due to insufficient funds and then treating it like it was new and subject to another fee.

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According to the case, an item that has been declined and then reprocessed “cannot conceivably become a new one” given that it is still the same item, especially when the accountholder takes no action to resubmit it.

The filing argues that 1st Advantage’s allegedly improper fee maximization practice breaches its contractual promise to assess only one fee per item when an accountholder lacks sufficient funds. More specifically, the contract states that 1st Advantage may either authorize the item and charge a $30 overdraft fee or reject the item and charge a $30 fee. 

“There is zero indication anywhere in the Contract that the same ‘item’ is eligible to incur multiple fees,” the complaint says.

Per the suit, industry leaders like Bank of America, Capital One, Wells Fargo, Alliant, and Ally have all announced plans to end the assessment of overdraft or NSF fees entirely because they disproportionately punish vulnerable populations such as young, low-income and non-white accountholders.

Conversely, 1st Advantage’s “systematic and intentional” imposition of these fees “has made substantial revenue to the tune of tens of millions of dollars, seeking to turn its customers’ financial struggles into revenue,” the case scathes.

The lawsuit looks to represent anyone who was assessed multiple fees on an item on a 1st Advantage Federal Credit Union checking account during the applicable statute of limitations period.

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