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KeyBank Overdraft and Nonsufficient Funds Fees Class Action

KeyBank, the complaint for this class action alleges, charges customers improper overdraft (OD) and nonsufficient funds (NSF) fees. The complaint alleges that the bank charges customers unjustified OD fees and charges more than one NSF fee on a single transaction.

How can a bank claim a transaction created an overdraft in an account if it did not? According to the complaint, the problem lies with a process called “Authorize Positive, Purportedly Settle Negative,” or APPSN.

When a customer attempts a debit transaction, the bank approves it. The bank puts aside that amount from customer’s account, and the customer cannot use those funds for another purpose. Thus the bank should always have the funds to pay that transaction.

However, the transaction may not settle until a few days later. If another transaction takes place in the meantime that overdraws the account, the complaint alleges that KeyBank then considers the settlement of the first transaction to also be an overdraft as well and charges the customer an overdraft fee.

According to the complaint the Consumer Financial Protection Bureau has called this practice “deceptive.”

As to the multiple NSF fees, KeyBank’s account agreement does specify that it may charge an NSF fee of $38.50 if an item is presented for payment and the account does not contain sufficient funds to pay the item. The problem is, the complaint says, that if the item is presented again and the account still does not contain sufficient funds, KeyBank will charge an additional NSF, even though it’s the same item.

Thus, the complaint alleges, “each time KeyBank reprocesses a transaction or check for payment after it was initially rejected for insufficient funds, KeyBank chooses to treat it as a new and unique item or transaction that is subject to yet another NSF fee.”

The complaint argues that the same item cannot become a new item, no matter how many times it is presented.

Finally, the complaint alleges that KeyBank charges OD fees to customers who have not opted in to an overdraft protection plan. The complaint quotes KeyBank as saying, “We do not authorize and pay an overdraft for Automated Teller Machine (‘ATM’) and everyday debit card transactions unless you ask us to.”

However, in reality, the complaint says, it does pay such overdrafts even when customers have not opted in and charges them OD fees for doing so.

Three classes have been defined for this action.

  • The Nationwide “Positive Balance” Class is all US residents with KeyBank accounts who were charged OD fees on transactions that were authorized into a positive available balance.
  • The Nationwide Multiple NSF Fee Class is all KeyBank checking account holders in the US who were charged more than one NSF fees on the same item.
  • The Nationwide Opt-In Class is all US residents with accounts with KeyBank who were charged OD fees on ATM and everyday debit card transactions when they had not opted in to overdraft services.
Article Type: Lawsuit
Topic: Consumer

Most Recent Case Event

KeyBank Overdraft and Nonsufficient Funds Fees Complaint

November 19, 2020

KeyBank, the complaint for this class action alleges, charges customers improper overdraft (OD) and nonsufficient funds (NSF) fees. It alleges that the bank charges customers OD fees in improper circumstances and charges more than one NSF fee on a single transaction.

KeyBank Overdraft and Nonsufficient Funds Fees Complaint

Case Event History

KeyBank Overdraft and Nonsufficient Funds Fees Complaint

November 19, 2020

KeyBank, the complaint for this class action alleges, charges customers improper overdraft (OD) and nonsufficient funds (NSF) fees. It alleges that the bank charges customers OD fees in improper circumstances and charges more than one NSF fee on a single transaction.

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