The complaint for this class action brings suit against Gate City Bank, taking issue with its practices for charging insufficient or nonsufficient funds (NSF) fees. The complaint alleges that Gate’s account agreements say it will charge a single fee on such items, while in practice it may assess an additional fee if the item is presented for payment again with insufficient funds.
The class for this action is all consumers of Gate City Bank who, during the applicable statute of limitations, were charged more than one fee on an item on a Gate City Bank checking account.
When an item, such as a check or an electronic item, is presented to a bank for payment, and the funds in the related checking account are insufficient to pay it, the bank can either pay the item anyway, in which case it may charge the customer an overdraft (OD) fee, or return the item unpaid, in which case it may charge the customer an insufficient or nonsufficient funds (NSF) fee.
But what happens if the item is presented for payment a second time, or even a third time, and the account still does not contain sufficient funds for payment? The complaint alleges that Gate charges a second fee.
As an example, the plaintiff in this case, Linda Koll, attempted a single payment in her account at Gate on or around September 17, 2021. Gate rejected the payment and charged her a $32 NSF fee. On or around September 22, the complaint claims, Gate tried to process the same item again, rejected it again, then charged her a second $32 fee. The complaint provides dates for other occasions when Gate also charged her multiple fees on a single item.
The complaint alleges that Gate’s account documents, the Terms and Conditions of Your Account and the Fee Schedule, do not permit this. It quotes the Fee Schedule as saying, about its NSF Fee, “This fee is imposed when a NSF condition is created by check, in-person withdrawal, ATM withdrawal, or other electronic means[.]” The fee is quoted as “$32/item[.]” The complaint emphasizes that this is “a” $32 fee that is assess “per item” and not per presentation of an item.
The complaint asserts, “The same item on an account cannot conceivably become a new one when it is rejected for payment then reprocessed, especially when—as here—Plaintiff took no action to resubmit it.” It adds, “Even if [Gate] reprocesses an instruction for payment, it is still the same item. Its reprocessing is simply another attempt to effectuate the original order or instruction created by the accountholder.”
According to the complaint, the Federal Deposit Insurance Corporation (FDIC) “has expressed concern” with this practice: “In 2012, the FDIC determined that one bank’s assessment of more than one NSF Fee on the same item was a ‘deceptive and unfair act.’”
Article Type: LawsuitTopic: Contract
Most Recent Case Event
Gate City Bank Multiple NSF Fees on a Single Item Complaint
April 22, 2022
The complaint for this class action brings suit against Gate City Bank, taking issue with its practices for charging insufficient or nonsufficient funds (NSF) fees. The complaint alleges that Gate’s account agreements say it will charge a single fee on such items, while in practice it may assess an additional fee if the item is presented for payment again with insufficient funds.
Gate City Bank Multiple NSF Fees on a Single Item ComplaintCase Event History
Gate City Bank Multiple NSF Fees on a Single Item Complaint
April 22, 2022
The complaint for this class action brings suit against Gate City Bank, taking issue with its practices for charging insufficient or nonsufficient funds (NSF) fees. The complaint alleges that Gate’s account agreements say it will charge a single fee on such items, while in practice it may assess an additional fee if the item is presented for payment again with insufficient funds.
Gate City Bank Multiple NSF Fees on a Single Item Complaint