Trustmark National Bank Facing Class Action Over Allegedly Improper Overdraft, ATM Fees

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Trustmark National Bank has been hit with a proposed class action that takes issue with its alleged practice of assessing unlawful overdraft and out-of-network ATM fees.

Under the terms of the bank’s contracts with customers, Trustmark, the case explains, is prohibited from assessing overdraft fees on a transaction that an account has sufficient funds to cover at the time the transaction is initiated.

In alleged violation of these contracts, the bank, the lawsuit claims, charges overdraft fees on transactions that cleared at the time of purchase—and for which Trustmark set aside funds from a checking account to cover—but a short time later, when the time came to “settle” with the merchant, had overdrawn the consumer’s account. What it comes down to, the suit says, is Trustmark’s practice of deciding on two separate occasions—for both the initial transaction and at the time of settlement with a merchant—whether to assess overdraft fees on a checking account, rather than deciding for only the initial transaction whether to assess an overdraft fee.

“In reality,” the complaint alleges, “Trustmark’s actual practice is to assay the same debit card transaction twice to determine if the transaction overdraws an account—both at the time a transaction is authorized and later at the time of settlement.”

The suit adds that should a consumer happen to overdraw his or her account in the time between an initial transaction, one for which Trustmark has already set aside funds to cover, and the time at which the movement of money is “settled” with a merchant, he or she can expect to be hit with an unlawful overdraft fee. From the suit:

“That means when any subsequent, intervening transactions are initiated on a checking account, they are compared against an account balance that has already been reduced to account for any earlier debit card transactions. This means that many subsequent transactions incur OD Fees due to the unavailability of the funds sequestered for those debit card transactions.”

According to the complaint, this practice is deceptive because when a consumer uses a debit card to make a purchase, Trustmark sets aside the amount of the purchase and places a debit hold on the funds. This, the suit argues, should guarantee that the funds will be available to cover the purchase when the bank ultimately pays, i.e. “settles with,” the merchant. Nevertheless, the bank, according to the lawsuit, allegedly allows subsequent intervening purchases to deplete the funds already set aside for prior purchases, and then charges multiple overdraft fees when the transactions settle and the funds are no longer available.

The case claims the “discrepancy” between the bank’s contracts and its actual practices causes consumers to rack up more overdraft fees than Trustmark is contractually permitted to charge.

Further still, the case slams Trustmark for its alleged failure to inform customers that when they use an out-of-network ATM, they will be charged not one, but two out-of-network fees – one by the ATM operator and one by Trustmark. The bank’s consumer contracts reference only the fee imposed on consumers by out-of-network ATM operators, the lawsuit says, and never disclose that Trustmark will also charge an out-of-network fee on the same transaction.

Lastly, the case sticks on the bank’s alleged policy of charging an undisclosed third fee for out-of-network ATM use related to balance inquiries. This third fee, which the suit says is not disclosed in Trustmark’s consumer contracts, is applied when a consumer withdraws cash from an out-of-network ATM and performs a balance inquiry during the transaction. A single cash withdrawal, according to the lawsuit, can incur for a consumer between $6 and $11 in fees.