Class Action Claims Citizens & Northern Charges Improper Fees for ‘Inconvenient Transfers’

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Citizens & Northern Corporation and Citizens & Northern Bank face a proposed class action that alleges they’ve imposed millions in unlawful banking fees on thousands of Pennsylvania and New York customers. 

The 34-page lawsuit claims more specifically that Citizens & Northern has improperly counted “inconvenient transfers,” i.e., certain transfers or withdrawals of funds from a savings account by mail, through an ATM, in person or over the phone (through a check mailed to the depositor), against a customer’s savings account transactions limit. Once a customer’s savings account transactions limit has been exceeded, Citizens & Northern will charge a $2 fee for each additional transaction, including for inconvenient transactions, which, under federal regulations, should be unlimited, the lawsuit says. 

Unlike inconvenient transfers, “convenient transfers”—which include transfers to another account or a third party through a preauthorized or automatic transfer; telephonic agreement, instruction or order; or check, draft, debit card or similar order made payable to a third party—are limited under federal law to no more than six per four-week statement period, the case explains. An inconvenient transfer, the suit stresses, is not to count against this six-transfer limit. 

Per the complaint, Citizens & Northern omits from its account disclosures that customers will be charged this additional $2 fee per inconvenient transaction over the monthly six-transaction limit. 

“As such, Defendants unlawfully profit at the expense of their customers while they violate federal law and charge Plaintiff and putative Class Members improper fees,” the suit, filed on August 11 in Pennsylvania, claims. “As a result, it is believed and therefore averred, that Defendants are fleecing their customers out of millions of dollars in unlawful banking fees.” 

The federal law that governs inconvenient and convenient transactions is called Regulation D, and was implemented by the government as a means to balance the interests of banking customers in accessing their money and the bank’s interest in maintaining an appropriate reserve of funds. Regulation D accomplishes this balance by mandating that banks impose a fee and/or change the designation of the account when a customer exceeds the aforementioned transaction limit, the suit says. 

The case relays that although Regulation D was amended in April 2020 to remove the six-transfers-per-month limit to make it easier for customers to access their money during the pandemic, the defendants “chose to continue charging their customers” for accessing their own funds. Despite this, however, the law nevertheless does not permit inconvenient transfers, such as those from ATMs, from a savings account to count against the transaction limit, the lawsuit argues. 

The plaintiff, who opened a Key Savings account with Citizens & Northern in January 2020, claims to have been improperly charged $216 in unlawful fees for inconvenient transfers. 

The lawsuit looks to cover Citizens & Northern customers who incurred at least one fee premised on excess transactions from their savings accounts where an inconvenient transfer/withdrawal caused them to exceed the defendants’ monthly transaction limit and where said fee was not previously reversed, refunded or returned during the class period. In the alternative, the case looks to represent all persons in Pennsylvania who fit the same criteria. 

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