Cabrillo Credit Union Overdraft Disclosures Violate Reg E California Class Action

Federal Reserve Regulation E requires that banks and other institutions must make certain disclosures and obtain agreement of the consumer before they can charge that consumer overdraft fees on one-time debit and ATM transactions that are not recurring. The complaint for this transaction alleges that Cabrillo Credit Union violates Reg E with its disclosures for “Debit Card Option” and the document “How … the Debit Card Option Works.”

The complaint alleges that Cabrillo’s documents fail to fulfill Reg E requirements in a number of ways.

First, the complaint alleges that the language it uses to describe when it will charge overdraft fees is “ambiguous and misleading.” This, the complaint says, is because “the opt-in disclosure agreement does not disclose that Cabrillo uses an internal artificial account balance to determine if a debit card or ATM transaction will be considered [to overdraw the account] (i.e., ‘available balance’), instead of the official and actual balance of the account.”

It also allegedly “describes an overdraft using language that conveys Cabrillo’s use of the actual balance instead of the artificial available balance to assess overdraft fees.”

In addition, the complaint says, “Cabrillo’s opt-in disclosure agreement also fails to disclose its full array of overdraft services, including its policies regarding the payment of overdrafts for other transactions such as checks, ACH transactions, and automatic bill payments.”

The complaint continues, “And while the opt-in disclosure agreement makes reference to ‘Overdraft Protection,’ it does not describe what that protection is or does, thus failing to meet Regulation E’s requirement that alternative plans for covering overdrafts, such as through lines of credit or transfers from funds from other accounts, be stated in the agreement.”

Additionally, the complaint contends, the agreement “fails to state the maximum number of overdraft fees or charges that may be assessed per day, or that there is no limit.”

The complaint alleges that these failures to provide proper and accurate disclosures mean that Cabrillo’s overdraft charges are and have been illegal and that it may not continue to “opt-in” members to its overdraft program. According to the complaint, the disclosures also violate California’s Unfair Competition law (UCL).

Two classes have been defined for this action.

The Regulation E Class is all California members of Cabrillo Credit Union who have or had accounts with Cabrillo and who were charged an overdraft fee on a one-time debit card or ATM transaction, between December 4, 2019 and the date the class is certified in this case.

The UCL, Section 17200 Class is all California members of Cabrillo Credit Union who have or had accounts with Cabrillo and who were charged an overdraft fee on a one-time debit card or ATM transaction, between December 4, 2016 and the date the class is certified in this case.

Article Type: Lawsuit
Topic: Consumer

Most Recent Case Event

Cabrillo Credit Union Overdraft Disclosures Violate Reg E California Complaint

December 4, 2020

Federal Reserve Regulation E requires that banks and other institutions must make certain disclosures and obtain agreement of the consumer before they can charge that consumer overdraft fees on one-time debit and ATM transactions that are not recurring. The complaint for this transaction alleges that Cabrillo Credit Union violates Reg E with its disclosures for “Debit Card Option” and the document “How … the Debit Card Option Works.”

Cabrillo Credit Union Overdraft Disclosures Violate Reg E California Complaint

Case Event History

Cabrillo Credit Union Overdraft Disclosures Violate Reg E California Complaint

December 4, 2020

Federal Reserve Regulation E requires that banks and other institutions must make certain disclosures and obtain agreement of the consumer before they can charge that consumer overdraft fees on one-time debit and ATM transactions that are not recurring. The complaint for this transaction alleges that Cabrillo Credit Union violates Reg E with its disclosures for “Debit Card Option” and the document “How … the Debit Card Option Works.”

Cabrillo Credit Union Overdraft Disclosures Violate Reg E California Complaint
Tags: Did Not Make/Receive Proper Disclosures, Overdraft Fees, Your Bank