Equity Bank Overdraft and Non-Sufficient Funds Fees Class Action

Two practices are at issue in this class action. The complaint alleges that Equity Bank (1) charges overdraft (OD) fees on accounts that were never actually overdrawn, and (2) charges more than one non-sufficient funds (NSF) fee on a single item. These practices, the complaint says, breaches the bank’s contracts. It refers to them as “Equity’s fee revenue maximization scheme.”

OD fees on accounts not overdrawn

How can a bank claim that a transaction overdraws an account if it in fact does not? The complaint points to a process called Authorize Positive, Purportedly Settle Negative (APPSN).

When a customer attempts a debit card transaction—for example, when the person buys something at a store—Equity removes the amount of the transaction from the customer’s account. This amount is held aside to cover the transaction, and the customer cannot use it for anything else. However, there is likely to be a gap in time between when the customer makes the purchase and when the bank settles with the store.

The complaint claims that since the money has been set aside, it should not cause an overdraft. But between that purchase and its settlement, the bank may sometimes use the put-aside amount to settle another transaction. If that transaction overdraws the account, the original purchase may be settled into an account with a negative balance. It then becomes an APPSN transaction.

The complaint contends that in such cases there should only be one overdraft fee—the one for the item that overdraws the account. It claims that since the amount for the store transaction (or whatever kind of transaction it was) was set aside, it cannot and should not by itself result in an overdraft.

More than one NSF fee

Additionally, the complaint alleges Equity should not charge more than one NSF fee (or an NSF fee plus an OD fee) on a single item. This can happen if the bank attempts a transaction, rejects it for insufficient funds, and then attempts it again before more money has been put in the account.

The complaint contends that Equity should not charge the second NSF fee on the same item. It points to Equity’s Account Documents, saying, “The Account Documents contain explicit terms indicating that fees will only be assessed once per item…” It also alleges, “The same ‘item’ cannot conceivably become a new one each time it is rejected for payment then reprocessed, especially when” the customer has not taken any action to request payment again.

The OD Class for this action is all holders of Equity checking accounts who, during the applicable statute of limitations, were charged OD fees for transactions that did not overdraw their accounts.

The NSF Class is all holders of Equity checking accounts who, during the applicable statutes of limitations, were charged more than one NSF (or an NFS fee and then an OD fee) on a single item.

Article Type: Lawsuit
Topic: Consumer

Most Recent Case Event

Equity Bank Overdraft and Non-Sufficient Funds Fees Complaint

November 5, 2020

Two practices are at issue in this class action. The complaint alleges that Equity Bank (1) charges overdraft (OD) fees on accounts that were never actually overdrawn, and (2) charges more than one non-sufficient funds (NSF) fee on a single item. These practices, the complaint says, breaches the bank’s contracts. It refers to them as “Equity’s fee revenue maximization scheme.”

Equity Bank Overdraft and Non-Sufficient Funds Fees Complaint

Case Event History

Equity Bank Overdraft and Non-Sufficient Funds Fees Complaint

November 5, 2020

Two practices are at issue in this class action. The complaint alleges that Equity Bank (1) charges overdraft (OD) fees on accounts that were never actually overdrawn, and (2) charges more than one non-sufficient funds (NSF) fee on a single item. These practices, the complaint says, breaches the bank’s contracts. It refers to them as “Equity’s fee revenue maximization scheme.”

Equity Bank Overdraft and Non-Sufficient Funds Fees Complaint
Tags: Additional charges in breach of contract, Insufficient or Non-Sufficient Funds Fees, Overdraft Fees, Your Bank