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Desert Financial Credit Union Terms for One-Time Overdrafts Class Action

Regulation E sets forth the terms a bank or credit union must meet before it can charge customers overdraft fees for one-time transactions. Desert Financial Credit Union (DFCU) has not met the requirements, claims the complaint for this class action, alleging that DFCU’s disclosure and agreement provides “ambiguous and misleading language that misrepresents the circumstances under which DFCU will charge the member an overdraft fee.”

The two classes for this action, the Regulation E Class and the Consumer Fraud Class, both have the same definition: All members of DFCU who have or have had accounts with DFCU who were charged an overdraft fee on a one-time debit card or ATM transaction, between May 10, 2020 and the date the class is certified in this case.

The Federal Reserve Regulation E requires that banks and other financial institutions that want to charge customers overdraft fees on one-time debit and ATM transactions must first do three things: They must give the customer or member clear, accurate, and easily understandable disclosures; they must provide the disclosures as a standalone document; and they must get the customer or member’s affirmative opt-in.

DFCU’s document is entitled “What You Need to Know About Overdrafts and Overdraft Fees.” But this is the document that the complaint alleges offers “ambiguous and misleading language” about the circumstances of overdrafts.

What part of the information is “ambiguous and misleading”? The complaint alleges, “The opt-in disclosure agreement does not disclose DFCU’s use of an internal artificial account balance to determine if a debit card or ATM transaction will be considered overdrawn (i.e., ‘available balance’), instead of the official and actual balance of the account.” Also, “it describes and overdraft using language conveying that DFCU uses a member’s actual balance instead of the artificial available balance to assess overdraft fees.”

Financial institutions must provide an accurate disclosure to customers and then gain their consent to opt in to an overdraft program. Because of this, the complaint charges, “DFCU’s assessment of all overdraft fees against members for one-time debit card and ATM transactions has been and continues to be illegal. Further DFCU’s continued use of a nonconforming disclosure agreement to ‘opt in’ new members to its overdraft service is invalid.”

The complaint says it seeks statutory damages plus the return of “improperly charge overdraft fees” within the applicable statute of limitations period. It also wants the court to stop DFCU from continuing to obtain opt ins to its overdraft program until it can offer members a disclosure document and opt-in that are compliant with Regulation E.

Article Type: Lawsuit
Topic: Consumer

Most Recent Case Event

Desert Financial Credit Union Terms for One-Time Overdrafts Complaint

May 10, 2021

Regulation E sets forth the terms a bank or credit union must meet before it can charge customers overdraft fees for one-time transactions. Desert Financial Credit Union (DFCU) has not met the requirements, claims the complaint for this class action, alleging that DFCU’s disclosure and agreement provides “ambiguous and misleading language that misrepresents the circumstances under which DFCU will charge the member an overdraft fee.”

Desert Financial Credit Union Terms for One-Time Overdrafts Complaint

Case Event History

Desert Financial Credit Union Terms for One-Time Overdrafts Complaint

May 10, 2021

Regulation E sets forth the terms a bank or credit union must meet before it can charge customers overdraft fees for one-time transactions. Desert Financial Credit Union (DFCU) has not met the requirements, claims the complaint for this class action, alleging that DFCU’s disclosure and agreement provides “ambiguous and misleading language that misrepresents the circumstances under which DFCU will charge the member an overdraft fee.”

Desert Financial Credit Union Terms for One-Time Overdrafts Complaint
Tags: Did Not Make/Receive Proper Disclosures, Overdraft Fees, Your Bank