Class Action Challenges AmeriCU Credit Union’s Alleged Overdraft Fee Practices

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AmeriCU Credit Union faces a proposed class action over its alleged practices of charging multiple overdraft fees on a single transaction and assessing an overdraft fee when a customer has not actually overdrawn their account.

According to the lawsuit, nothing in the credit union’s account documents allows for more than one overdraft fee to be charged per transaction, or for AmeriCU to assess fees on transactions that have not overdrawn an account. The case claims AmeriCU has breached its contracts with customers and financially injured the consumers “to the tune of millions of dollars bilked from their accounts.”

The suit states that AmeriCU has a practice of charging a $28 insufficient funds fee each time a transaction is reprocessed for payment despite never disclosing in its account documents that it does so. Per the case, AmeriCU’s fee schedule states that a single $28 fee, at most, will be assessed per item. The lawsuit argues that a single check, ACH (automated clearinghouse) or other electronic payment cannot reasonably be considered a new “item” each time it is reprocessed for payment, especially when the consumer takes no additional action to resubmit the transaction.

“Even if AmeriCU reprocesses an instruction for payment, it is still the same item,” the complaint alleges. “The Bank’s reprocessing is simply another attempt to effectuate an accountholder’s original order or instruction.”

Customers reasonably understand based on the defendant’s account documents that they will be assessed only a single fee if a payment is rejected due to insufficient funds, the suit says. Thus, AmeriCU, the case argues, has breached its contracts with customers by employing this “abusive practice” without clearly disclosing it.

The lawsuit goes on to claim that AmeriCU frequently charges overdraft fees on debit card transactions that do not actually overdraw a customer’s account. At issue are what the complaint describes as “Authorize Positive, Purportedly Settle Negative” (APPSN) transactions, during which the bank initially authorizes a transaction but then charges an overdraft fee against it when the transaction allegedly settles into a negative balance days later. According to the case, if an intervening transaction depletes a customer’s account between when the initial transaction was authorized and when it settles, AmeriCU will charge an overdraft fee on both the intervening and initial transactions.

The lawsuit alleges, however, that because AmeriCU sets aside funds to cover the initial transaction when it is first authorized and makes them unavailable for the customer’s use, there should always be sufficient funds in the account to cover an APPSN transaction.

“Still, despite keeping those held funds off-limits for other transactions, Defendant improperly charges OD Fees on those APPSN Transactions, even though the APPSN Transactions always have sufficient available funds to be covered,” the complaint attests.

According to the case, there is no justification for this practice “other than to maximize Defendant’s OD Fee revenue.”

Moreover, AmeriCU’s contracts with customers do not disclose the credit union’s APPSN transaction practices, and instead state in “plain, clear, and simple language” that the defendant will charge overdraft fees only on transactions for which an account contains insufficient funds.

“In short,” the complaint says, “Defendant is not authorized by contract to charge OD Fees on transactions that have not overdrawn an account, but it has done so and continues to do so.”

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