Sunbelt Federal Credit Union Charges ‘Unreasonable’ Overdraft Fees, Class Action Alleges

New to ClassAction.org? Read our Newswire Disclaimer

Sunbelt Federal Credit Union faces a proposed class action over its alleged practice of charging overdraft fees on certain kinds of transactions, even when a customer has sufficient funds in their account.

The transactions at issue in the 25-page case are referred to as “authorize positive, settle negative” (APSN) transactions. An APSN transaction is when the credit union initially authorizes a debit card transaction but then charges a $25 overdraft fee at the time of settlement because the account balance has purportedly been reduced in the meantime, the suit says.

The lawsuit argues that despite the delay between authorization and settlement, there are always sufficient funds in a customer’s account to cover an APSN transaction since Sunbelt sets aside the money to pay the merchant at the time the transaction is initially authorized and makes those funds unavailable for the customer’s use.

According to the suit, the Mississippi credit union’s practice of charging overdraft fees for APSN transactions violates the terms of its contract, which promises that Sunbelt will only charge an overdraft fee when a customer’s account does not contain sufficient funds to cover a transaction, “but we pay it anyway.” 

“Defendant’s practice of charging OD Fees even when sufficient available funds exist to cover a transaction violates its contractual promise not to do so,” the complaint contends. “This discrepancy between Defendant’s actual practice and the Contract causes consumers like Plaintiff to incur more OD Fees than they should.”

The case claims that there is no justification for Sunbelt’s overdraft practices “other than to maximize Defendant’s OD Fee revenue.”

The credit union’s allegedly improper overdraft fee practice is rooted in what the complaint describes as a “secret posting process.” Per the case, an APSN transaction is initiated at the time a Sunbelt customer swipes their debit card and the credit union authorizes the transaction. The customer’s account balance is then reduced by the amount of the transaction, and the funds are set aside to pay the merchant at the time of settlement, the suit relays.

The lawsuit alleges, however, that when it comes time to settle the transaction, Sunbelt releases the hold on the sequestered funds “for a split second” and then re-debits the transaction a second time. If an intervening transaction should cause the customer’s account to fall into a negative balance, the re-debit of the APSN transaction will trigger an overdraft fee, the suit states.

The lawsuit says this practice is not disclosed in Sunbelt’s contracts with customers and goes against how they understand a debit transaction to work. Per the case, the credit union has used its discretion to interpret the terms of its contract “in an unreasonable way that violates common sense and reasonable consumers’ expectations.”

The suit looks to represent Sunbelt Federal Credit Union accountholders who, during the applicable statute of limitations period, were assessed an overdraft fee on a debit card transaction that was authorized on sufficient funds and settled on negative funds in the same amount for which it was authorized.

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