Class Action Claims Pathfinder Bank Wrongfully Charges Multiple Overdraft Fees on Single Transactions

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A proposed class action challenges Pathfinder Bank’s alleged practice of charging more than one insufficient funds (NSF) or overdraft fee on a single transaction in apparent violation of its customer contracts.

Although the bank promises customers that it will charge a single $32 fee in the event their account balance drops too low to cover a particular “item,” such as a check, withdrawal or service charge, Pathfinder, the 14-page lawsuit alleges, “doesn’t abide by this promise,” and instead “routinely” charges multiple fees for the same item, which drivers customers’ accounts “deeper into negative territory.”

Per the complaint, Pathfinder’s customers have been injured monetarily “to the tune of millions of dollars” as a result of the bank’s alleged breach of its “clear contractual commitments.”

According to the lawsuit, Pathfinder’s “abusive practices” are not standard within the financial services industry. While many major banks charge only one NSF or overdraft fee per item, those who engage in the same practices as Pathfinder, i.e. charging multiple fees on a single reprocessed item, disclose in their customer account agreements that they do so, the case alleges. Per the suit, the disclosures in the defendant’s deposit agreement “never discuss a circumstance” in which Pathfinder may assess multiple NSF or overdraft fees on one item that has been reprocessed.

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

The plaintiff, a Sandy Creek, New York resident, says she was assessed a $32 fee on an attempted ACH payment to AT&T due to having insufficient funds in her account. The suit notes that the plaintiff does not dispute this initial fee as it is allowed by Pathfinder’s deposit agreement. Four days later, however, Pathfinder reprocessed the same item and charged the plaintiff an additional $32 NSF fee, according to the case. Finally, the lawsuit says, a third $32 fee was assessed on the transaction when the bank attempted to process it yet another time two days later.

“In sum, Pathfinder assessed Plaintiff $92 in fees in its failed effort to process a single payment,” the complaint attests.

The lawsuit says the plaintiff understood the ACH transaction to be a single item, as defined in Pathfinder’s contract, that could be assessed only a single NSF or overdraft fee. The plaintiff says she experienced the same pattern “numerous other times” while she was a Pathfinder accountholder.

“It was bad faith and totally outside Plaintiff’s reasonable expectations for Pathfinder to use its discretion to assess two or three NSF Fees for a single attempted payment,” the complaint charges.

The lawsuit looks to represent all Pathfinder accountholders, as well as a subclass of New York accountholders, who, within the applicable statute of limitations period, were charged multiple fees on the same item.

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