Mid-Hudson Valley FCU Multiple NSF Fees on One Item Class Action

Mid-Hudson Valley Federal Credit Union offers retail banking services in New York. The complaint for this class action alleges that it charges multiple non-sufficient funds (NSF) fees on a single item, when a previously unpaid item is re-presented for payment. The complaint alleges that this is not permitted by its account documents and that it is permitted to charge only one fee per item.

The National Class for this action is all Mid-Hudson Valley Federal Credit Union checking account holders in the US who, during the applicable statute of limitations, were charged multiple fees on the same item. A New York Subclass has also been defined for those in the above class who are located in New York.

The complaint alleges that NSF and overdraft (OD) fees fall hardest on people who are living paycheck to paycheck and on Black and Latino persons. Because of this, the complaint alleges, some banks are not charging them anymore.

The plaintiff in this case, Reginald Edwards, claims he has been charged more than one NSF fee on a single item. For example, the complaint alleges, “on February 23, 2021 and April 23, 2021, [Edwards] was charged $35 NSF Fees on transactions which were resubmitted by the merchant for payment without [Edwards’s] request to reprocess the transactions.” On his statement, the complaint says, the fees were attributed to “Retry Pymt.”

According to the complaint, Mid-Hudson’s account documents only permit it to charge one $35 NSF fee per item. The complaint alleges, “The same check, ACH, or other electronic payment on an account is not a new item each time it is rejected for payment then reprocessed, especially when—as here—[Edwards] took no action to resubmit the transaction.”

The Federal Deposit Insurance Corporation (FDIC) addressed the problem of multiple NSF fees in an issue of its Consumer Compliance Supervisory Highlights, the complaint says, with reference to the Federal Trade Commission Act’s Section 5’s prohibition of unfair or deceptive acts or practices.

The complaint quotes the FDIC as saying that the “failure to disclose material information to customers about re-presentment practices and fees” may be deceptive, such as when terms such as “per item” or “per transaction” are not clearly defined, or unfair if it is likely to cause substantial injury to customers: “For example, there is risk of unfairness if multiple fees are assessed for the same transaction in a short period of time without sufficient notice or opportunity for consumers to bring their account to a positive balance.”

According to the complaint, the American Bankers Association also recommends that banks who charge multiple NSF fees make a clear statement about it in their account agreements.

The complaint alleges that Mid-Hudson did update its account documents to disclose this practice recently, in 2022.

Article Type: Lawsuit
Topic: cons
Tags: Breach of Contract, Breach of the Covenant of Good Faith and Fair Dealing, Your Bank