Liberty Bank Overdraft Disclosures Non-Compliant with Reg E Class Action

Banking customers nowadays cannot be charged overdraft fees on certain items if they do not affirmatively opt in to their bank’s overdraft program. This class action brings suit against Liberty Bank, alleging that its disclosure and opt-in document “provides ambiguous and inaccurate language” in describing when the bank will charge overdraft fees. The complaint alleges that Liberty has violating Federal Reserve Regulation E.

The complaint claims that Regulation E “requires financial institutions to provide complete, accurate, clear, and easily understandable disclosures of their overdraft services and obtain affirmative customer consent before the financial institution can lawfully charge overdraft fees on non-recurring debit transactions and ATM withdrawals.”

According to the complaint, Liberty has titled its disclosure agreement as “Important Information about Overdrafts and Fees” and has done this “intentionally.” It also alleges that the disclosure uses “ambiguous and inaccurate language” for the disclosures. The complaint says that the disclosure agreement is therefore “non-compliant” and that Liberty may not assess overdraft fees to its customers on Regulation E transactions.

“Despite this,” the complaint alleges, “Liberty routinely assesses overdraft fees on nonrecurring debit transactions and ATM withdrawals.” The complaint claims that this also violates the Connecticut Unfair Trade Practices Act (CUTPA).

Another problem the complaint cites is how the overdrafts are assessed. While the disclosure agreement says that an overdraft occurs when there is not enough money in the account to pay a transaction, the complaint denies this: “Instead, it is based on an artificially reduced calculation created by Liberty’s internal bookkeeping called the ‘available balance,’ which deducts holds for future transactions.” It alleges that this “available balance” exists “only on paper,” and that there may in fact be enough money in the account to cover a transaction when Liberty declares there to be an overdraft.

The complaint alleges that “Liberty has failed to clearly disclose to the customer which balance is used to assess an overdraft fee…” It claims that Liberty’s decision to use the “available balance” instead of the actual balance causes Liberty to “assess[] overdraft fees on 10-20% more Reg E transactions than it otherwise would.”

The Regulation E Class for this action is all customers who have or had accounts with Liberty Bank who were charged an overdraft fee on a one-time debit card or an ATM transaction, between October 23, 2019 and the date the class is certified in this case.

The complaint also defines a CUTPA Class, with roughly the same definition as the Reg E Class, except that the class period runs from October 23, 2017 to the date of class certification.

Article Type: Lawsuit
Topic: Consumer

Most Recent Case Event

Liberty Bank Overdraft Disclosures Non-Compliant with Reg E Complaint

October 23, 2020

Banking customers nowadays cannot be charged overdraft fees on certain items if they do not affirmatively opt in to their bank’s overdraft program. This class action brings suit against Liberty Bank, alleging that its disclosure and opt-in document “provides ambiguous and inaccurate language” in describing when the bank will charge overdraft fees. The complaint alleges that Liberty has violating Federal Reserve Regulation E.

Liberty Bank Overdraft Disclosures Non-Compliant with Reg E Complaint

Case Event History

Liberty Bank Overdraft Disclosures Non-Compliant with Reg E Complaint

October 23, 2020

Banking customers nowadays cannot be charged overdraft fees on certain items if they do not affirmatively opt in to their bank’s overdraft program. This class action brings suit against Liberty Bank, alleging that its disclosure and opt-in document “provides ambiguous and inaccurate language” in describing when the bank will charge overdraft fees. The complaint alleges that Liberty has violating Federal Reserve Regulation E.

Liberty Bank Overdraft Disclosures Non-Compliant with Reg E Complaint
Tags: Overdraft Fees, Regulation E, Your Bank