Fulton Savings Bank Hit with Class Action Over Alleged Fee Stacking

New to ClassAction.org? Read our Newswire Disclaimer

A proposed class action alleges Fulton Savings Bank’s practice of stacking fees on top of fees for overdrawn checking accounts is unlawful and violates the terms of its customer contracts. 

The 12-page complaint challenges Fulton’s $32 overdraft fee, and/or insufficient funds (NSF) fee, on a third-party merchant’s attempt to collect its own fee on a transaction that had been previously rejected by the bank and thus already subject to a $32 fee. The lawsuit contends that Fulton’s alleged fee stacking harms its “most vulnerable customers,” namely younger, lower-income, non-white accountholders.

The suit states that rather than impose only a $32 fee in the event a customer’s account lacks sufficient funds to cover a third-party merchant’s bill, or only the fee plus another charged by the merchant for the rejected payment, Fulton “goes a step further” and treats the merchant’s fee as a new transaction subject to a new $32 fee. Per the case, this practice can tally nearly $100 in fees on a single payment. 

“This is despite the fact that Defendant’s accountholders never actually perform a separate consumer-initiated withdrawal or transaction and instead are being charged fees by third-party merchants,” the suit argues. 

According to the lawsuit, Fulton’s customer contract specifies that an overdraft occurs when “you do not have enough money in your account to cover a transaction.” The suit contends that no overdraft occurs when a merchant attempts to collect a fee on a previously rejected transaction given this fee is not a “transaction” initiated by a customer, and “just a third-party merchant’s attempt to collect its own fee.” 

“Taken together, the Contract promises that $32 fees are only assessed on consumer-initiated ‘withdrawals’ or ‘transactions,’ not on a third party’s fee on a transaction that had been previously rejected and assessed a $32 fee by Defendant,” the case states. 

The complaint adds that the plaintiff, a Liverpool, New York consumer, understood that he would incur, at most, a single $32 fee from Fulton should a transaction overdraw his account and, at most, a single $20 fee from a merchant should the transaction be rejected by the bank and returned unpaid. 

“Instead, Plaintiff was charged two $32 fees by Defendant, including a $32 fee on the merchant’s $20 fee,” the case summarizes. 

The lawsuit looks to represent all consumers who, during the applicable statute of limitations, were Fulton Savings Bank checking account holders and were assessed an overdraft fee or an insufficient funds fee on a third-party merchant’s attempt to collect its own fee.

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