Overdraft, NSF Fee Class Action Litigation Not Slowing Down for CUs

In 2021, the CUNA Mutual Group third-party litigation team has handled on average two new overdraft/NSF Fee class action matters a week.

If your credit union hasn’t been hit with one of these class actions yet, there is a good chance you’ll be hit with one. And, if you’ve already been hit, there’s still a chance you could be impacted by another.

The monetary exposure can be significant with a seven-figure exposure not being unusual with the impact of the statute of limitations for each state.

Details

Law firms continue to send demand letters threatening a lawsuit and/or file a lawsuit against credit unions alleging members were improperly assessed overdraft and/or NSF fees.

The allegations include:

• Improperly charged multiple NSF fees on the same transactions (refers to incoming debits to member accounts that are returned multiple times by credit unions)
• Improperly assessed overdraft fees on debit card transactions posting to member accounts when funds were previously set aside when preauthorization holds were placed
• Overdraft fees were improperly assessed using the “available” balance rather than the “actual” or ledger balance and that credit union failed to accurately describe this in agreements/disclosures.

The monetary exposure/damages are based on:

• The statute of limitations
• Whether the allegations are for overdrafts / NSF fees or both
  • account holders assessed multiple NSF Fees on an item
  • account holders assessed bank fees on transactions that did not overdraw their checking accounts
  • Write off uncollected fees
• Settling in the demand stage vs. going to litigation
• Settling on an individual vs class settlement
• Plaintiff attorney fees

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