Lawsuit Investigation Over Store Debit Card Problems

Attorneys have been speaking with anyone who was charged returned payment, insufficient fund or overdraft fees in connection with their Shell or Nordstrom debit cards.

The attorneys are investigating whether class action lawsuits can be filed against the companies for potentially misleading shoppers into signing up for debit cards that function nothing like traditional debit cards – and instead, come with a host of problems.

What’s the Problem Exactly?

Attorneys have reason to suspect that these “debit” cards do not allow for the immediate withdrawal of funds. Instead, transactions can take days to process – and, for some consumers, this may mean that their checking accounts no longer have enough money to cover the purchase. As a result, they may be charged insufficient fund fees from both the store and their bank.

Target Facing Class Action Lawsuit Over Debit Cards That “Function Nothing Like Debit Cards”

The investigation into Nordstrom and Shell Saver debit cards started after news broke that Target had been hit with a lawsuit over its REDCard. According to the suit, Target’s store-branded debit “functions nothing like every other debit card on the market” and allows the retailer to engage in a “deceptive, unfair and unconscionable practice” of charging returned payment fees (RPFs) that range from $20 to $40.

The lawsuit claims that consumers expected the debit card to function, well, exactly like a debit card.

These aspects, the suit claims, are inherent to typical debit cards. The lawsuit also points out that most true debit cards come with overdraft protection if the cardholder attempts to make a purchase that his or her account cannot cover.

Lawsuit Claims Shoppers Hit with Two Fees – One from Target, One From Bank

Instead, the suit alleges, Target delays deducting purchase transactions from consumers’ checking accounts. This, for some people, means the account will no longer have enough money when the store finally “gets around to processing the transaction,” the suit claims.

Some consumers may then be hit with two separate fees – one from Target and one from their bank. According to the lawsuit, Target will charge the shopper a returned payment fee ranging between $20 and $40. At the same time, the consumer’s bank may also then charge an overdraft or non-sufficient fund fee “each time that Target attempts and re-attempts to debit the same amount from an account.”

This, according to the lawsuit, means that a shopper can pay nearly $100 in fees for one simple overdraft.

Store Debit Card Problems Include Delayed Processing Time, Overdraft Fees

A number of consumers have posted online about problems they experienced with certain retail debit cards [sic throughout]:

“Anybody else have issues with the target debit card? I used it for the first time Dec. 19th and have yet to have anything come through to my bank!!! I called them and they sent me to some outsourced call center in India… today is the 3rd of January and I still have yet to see anything come up in my account. I called my bank today and they said there is no way that that would have anything to do with them.”
—Meggie256, community.babycenter.com

“I have the Nortdstrom Debit Card it takes up to 5 business days.  Make sure its not business days...that could make it go longer before it shows.”
—ryi913, community.babycenter.com

“Do not get this card [Nordstrom] what so ever. I ordered an item late on a Friday night, sure it's the weekend so the funds won't be drawn from my account. After 4 buisness days I called to see what was going on. The lady told me it will most likely be another 3-5 buisness days for the funds to be pulled. I am so annoyed and am canceling the card right away.”
Anyonymous, creditkarma.com

“Last month, I made a very substantial purchase in order to get the 5% discount. I was under the impression that the Debit card worked like a debit card because it says it's a DEBIT card… Well, surprise surprise surprise, that Target transaction was NOT a debit card transaction. The funds were not immediately taken out or even put on hold. It wasn't even taken out as a check or credit card transaction. It was done as an electronic wireless transfer. This is a whole new type of transaction for us and because of the delay with such a huge purchase and the subsequent actual debit card transactions, this created an NSF fee.”
—Jamie, blog.credit.com

“This card has cost me more money than I ever saved. When you transfer money to the card it can take up to a week! Since the money wasn't deducted from my account right away, when it finally was deducted my it overdrew my bank account and I was hit with an overdraft fee for that AND two other transactions since I had no idea my account was in the red.”
—Kelsey, creditforums.com

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