Class Action Alleges GasBuddy Fails to Disclose ‘Massive’ Risk of Overdraft, NSF Fees

New to ClassAction.org? Read our Newswire Disclaimer

A proposed class action claims GasBuddy, LLC has misleadingly represented itself as a service to help consumers save money on gasoline while failing to disclose that those who use its payment card face “huge, undisclosed risks” of incurring insufficient funds and overdraft fees.

The 16-page case alleges that although GasBuddy assures consumers that its payment cards are “like a debit card,” this is far from the truth. Per the suit, the GasBuddy card, which consumers can use at select gas stations to purportedly save a few cents per gallon on fuel, is “nothing ‘like a debit card’” given transactions may be approved even when there are insufficient funds in a person’s checking account. Moreover, transactions are often processed days after they initially occur, when users may no longer have sufficient funds in their accounts, the case says.

According to the complaint, none of these risks are disclosed to consumers when they sign up for GasBuddy. The lawsuit alleges that unbeknownst to consumers, any money they might save with their GasBuddy card is far outweighed by the “massive risk” of incurring “extreme and crushing” insufficient funds (NSF) and overdraft fees from using the service. The case contends consumers would not have used GasBuddy had they been adequately informed of the risks involved.

“In its rush to tout itself as convenient, simple, automatic, ‘like a debit card,’ and as providing guaranteed savings, GasBuddy does not disclose that overdraft and NSF fees are a likely and devastating consequence of the use of its service,” the complaint reads. “No reasonable consumer would run this risk.”

The lawsuit states that when a consumer signs up with GasBuddy, they are asked to provide their checking account information. Although GasBuddy assures users that its payment card is “kind of like a debit card” in that GasBuddy will deduct money from their checking accounts “[e]very time you swipe your card,” the company’s service is, in truth, an electronic check, the case alleges. 

Yet unlike electronic checks, GasBuddy does not verify that a consumer has sufficient funds in their account to cover the transaction, even though it “has the capacity to do so,” according to the lawsuit. Moreover, the suit says that GasBuddy often groups transactions together over several days and submits them for processing “in giant batches” over the automated clearinghouse (ACH) network, thereby causing processing delays that many times trigger NSF and overdraft fees.

“If GasBuddy acted more quickly, transactions would often debit while consumers still had funds in their account,” the complaint argues, claiming GasBuddy has refused to implement existing technology for “virtually instantaneous” processing because of the cost involved.

Given the “real and repeated risk” of incurring NSF and overdraft fees by using GasBuddy’s service, the company’s representations that it provides gas savings are misleading, the lawsuit alleges. The plaintiff, a Texas resident, claims that although he has saved “a few pennies per gallon” on gas when using GasBuddy, the service has cost him at least $200 in overdraft and NSF fees. According to the suit, the plaintiff would not have signed up for GasBuddy—much less paid a monthly $4.99 subscription fee for “premium” services—had he known of the true risks involved.

The plaintiff looks to represent anyone who used the GasBuddy service and incurred overdraft or NSF fees as a result of a GasBuddy transaction.

Get class action lawsuit news sent to your inbox – sign up for ClassAction.org’s newsletter here.