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California Coast Credit Union Disclosures for Overdraft Program Class Action

This class action takes aim at California Coast Credit Union (CCCU) for the disclosures it provides to customers before they agree to its overdraft program. The complaint alleges that CCCU violates Regulation E because it does not disclose that the credit union uses the “available balance” of the customer account to determine whether it is overdrawn, instead of the actual balance.

Customers must opt in to overdraft programs before financial institutions can charge them overdraft fees on one-time debit card and ATM transactions.

Regulation E sets forth four requirements for financial institutions that want to offer customers their overdraft programs. According to the complaint, one of these requirements is that the institution must give the customer disclosures about the service that must be “complete, accurate, clear, and easily understandable[.]”

The complaint alleges that CCCU does not fulfill this requirement, because it does not tell customers that it uses what the complaint calls “an internal artificial account balance to determine if a debit card or ATM transaction” will overdraw an account. In fact, the complaint alleges, the language conveys that CCCU uses the actual balance to assess overdraft fees.

What’s the difference between the two? When a customer commits to a transaction, even if that transaction does not settle immediately and the money is still in the account, CCCU may put a hold on the funds for it and subtract them from the amount in the account.

For example, if a man has $1,000 in his account, and he schedules a rent payment for $800 for a few days later and a $200 car payment for a couple of days after that, his actual balance will still be $1,000; but his available balance will be $0. If, before the rent is scheduled to be paid, he gets a $40 water bill that he must pay immediately, this makes a great deal of difference.

Using the actual balance, the only overdraft he will have is for the $200 car payment. He also has time to deposit an additional $40 to avoid this overdraft. But using the available balance, all three transactions will incur overdraft fees.

Two classes have been defined for this action:

  • The Regulation E Class is all California members of CCCU with CCCU accounts who were assessed an overdraft fee on a one-time debit card or ATM transaction based on a non-compliant opt-in disclosure agreement as described in this complaint, between December 10, 2020 and the date the class is certified in this case.
  • The UCL, Section 17200 Class is all California members of CCCU with CCCU accounts who were assessed an overdraft fee on a one-time debit card or ATM transaction based on a non-compliant opt-in disclosure agreement as described in this complaint, between December 10, 2017 and the date the class is certified in this case.
Article Type: Lawsuit
Topic: Consumer

Most Recent Case Event

California Coast Credit Union Disclosures for Overdraft Program Complaint

December 10, 2021

This class action takes aim at California Coast Credit Union (CCCU) for the disclosures it provides to customers before they agree to its overdraft program. The complaint alleges that CCCU violates Regulation E because it does not disclose that the credit union uses the “available balance” of the customer account to determine whether it is overdrawn, instead of the actual balance.

California Coast Credit Union Disclosures for Overdraft Program Complaint

Case Event History

California Coast Credit Union Disclosures for Overdraft Program Complaint

December 10, 2021

This class action takes aim at California Coast Credit Union (CCCU) for the disclosures it provides to customers before they agree to its overdraft program. The complaint alleges that CCCU violates Regulation E because it does not disclose that the credit union uses the “available balance” of the customer account to determine whether it is overdrawn, instead of the actual balance.

California Coast Credit Union Disclosures for Overdraft Program Complaint
Tags: Did Not Make/Receive Proper Disclosures, Overdraft Fees, Regulation E, Your Bank