iThink Financial Credit Union Unfair OD and NSF Fees Class Action

The iTHINK Financial Credit Union was formerly the IBM Southeast Employees’ Credit Union (IBMSECU). The complaint for this class action alleges that the credit union does “unfair and unconscionable assessment and collection of ‘overdraft fees’ (‘OD Fees’) on accounts that were never actually overdrawn, and … routinely charg[es] two or more fees, including OD Fees and non-sufficient funds fees (‘NSF Fee[s]’), on a single item. The complaint claims that these actions violate the terms of IBMSECU’s contracts.

How are overdrafts charged if accounts are never overdrawn? The complaint blames it on a process called “Authorize Positive, Purportedly Settle Negative” (APPSN).

Normally, when a debit transaction is authorized, IBMSECU immediately reduces the amount of the account’s balance by the amount of the transaction and sets those funds aside. According to the complaint, then, the account always has enough to pay authorized transactions without becoming overdrawn.

However, the complaint says, IBMSECU may settle the transaction only days later. (Settlement is the process where the funds are actually removed from the account and transferred to the other party in the transaction.)

In fact, the complaint claims, the Consumer Financial Protection Bureau “has expressed concern” about this practice, calling it “unfair” or “deceptive” and describing it this way: “A financial institution authorized an electronic transaction, which reduced a customer’s available balance but did not result in an overdraft at the time of authorization; settlement of a subsequent unrelated transaction that further lowered the customer’s available balance and pushed the account into overdraft status; and when the original electronic transaction was later presented for settlement, because of the intervening transaction and overdraft fee, the electronic transaction also posted as an overdraft and an additional overdraft fee was charged.”

The other practice the complaint takes issue with is the charging of more than one NSF fee for a single item.

For example, the complaint says, when plaintiff Willie Collier tried to make a payment of $227 without sufficient funds in his account, IBMSECU rejected the transaction and charged him a $32 NSF fee. Six days later, the complaint says, IBMSECU tried to process the item again, even though Collier’s account still did not have the funds to pay it. Again, IBMSECU rejected the transaction and charged Collier another $32 NSF fee—even though Collier had not requested that IBMSECU re-try the transaction.

The complaint alleges that the $227 item was still the same item and should not have been charged a fee as if it were a different item.

Two classes have been proposed for this action.

  • The OD Fee Class is all IBMSECU customers who, within the applicable statute of limitations period, were charged OD fees on APPSN transactions in an IBMSECU checking account.
  • The Multiple Fee Class is all IBMSECU customers who, within the applicable statute of limitations period, were charged multiple fees on the same item in an IBMSECU checking account.
Article Type: Lawsuit
Topic: Consumer

Most Recent Case Event

iThink Financial Credit Union Unfair OD and NSF Fees Complaint

March 16, 2020

The iTHINK Financial Credit Union was formerly the IBM Southeast Employees’ Credit Union (IBMSECU). The complaint for this class action alleges that the credit union does “unfair and unconscionable assessment and collection of ‘overdraft fees’ (‘OD Fees’) on accounts that were never actually overdrawn, and … routinely charg[es] two or more fees, including OD Fees and non-sufficient funds fees (‘NSF Fee[s]’), on a single item. The complaint claims that these actions violate the terms of IBMSECU’s contracts.

iThink Financial Credit Union Unfair OD and NSF Fees Complaint

Case Event History

iThink Financial Credit Union Unfair OD and NSF Fees Complaint

March 16, 2020

The iTHINK Financial Credit Union was formerly the IBM Southeast Employees’ Credit Union (IBMSECU). The complaint for this class action alleges that the credit union does “unfair and unconscionable assessment and collection of ‘overdraft fees’ (‘OD Fees’) on accounts that were never actually overdrawn, and … routinely charg[es] two or more fees, including OD Fees and non-sufficient funds fees (‘NSF Fee[s]’), on a single item. The complaint claims that these actions violate the terms of IBMSECU’s contracts.

iThink Financial Credit Union Unfair OD and NSF Fees Complaint
Tags: Additional charges in breach of contract, More Than One Fee Assessed on a Single Item/Transaction, Overdraft Fees