Municipal Credit Union Multiple NSF Fees on Rejected Payments Class Action

When a bank account does not contain sufficient fees to cover an item presented for payment, the financial institution may refuse to pay it and charge the accountholder a non-sufficient funds (NSF) fee. The complaint for this class action alleges that Municipal Credit Union goes farther and charges multiple NSF fees on a single item if it is presented and unpayable multiple times. The complaint alleges that this violates Municipal’s account agreement.

The class for this action is all consumers who, during the applicable statute of limitations, were Municipal Credit Union checking account holders and who were assessed multiple fees on an item that was reprocessed by Municipal without a new authorization from the consumer.

Attached to the complaint in its original filing are Municipal’s Account Agreement and Regulations and its Schedule of Dividends, Service Charges and Fees. The complaint alleges that the practice of charging multiple NSF fees breaches these agreements.

According to the complaint, Municipal makes “millions of dollars annually” on its overdraft (OD) and NSF fees. Unfortunately, the complaint says, “Municipal’s NSF Fees fall disproportionately on racial and ethnic minorities, the elderly, and the young, many of whom regularly live paycheck-to-paycheck and therefore carry low bank account balances.”

Municipals documents permit it to charge a $32 NSF fee when the account does not contain sufficient funds to pay “an ACH debit request or bill payment you authorize or check (share draft) you draw” and Municipal rejects it.

The complaint underlines this construction: “Municipal’s Contract indicates that only a single NSF Fee or a single overdraft fee will be charged per ‘item’ that the accountholder authorizes or draws. An electronic item reprocessed after an initial return for insufficient funds without the accountholder’s knowledge or re-authorization cannot and does not fairly become a new, unique ‘item’ for fee assessment purposes.”

According to the complaint, this practice by Municipal breaches the duty of good faith and fair dealing: “Specifically, Municipal abuses its contractual discretion by (a) reprocessing transactions when it knows that a customer’s account lacks sufficient funds, and (b) charging additional fees upon reprocessing.”

The plaintiff in this case, Elsa Thompson, lives in Lehigh Acres, Florida and has a checking account at Municipal.

On or about February 22, 2017, she tried to make a payment of $204.86 to PayPal by and ACH request. Because her account did not have sufficient funds, Municipal rejected the payment request and charged her a $30 NSF fee. On or around March 1, 2017, the complaint says, “[w]ithout [her] knowledge and without obtaining a new authorization from [her], … Municipal processed the same item again, rejected the item again, and charged [Thompson] a second $30 NSF Fee for doing so.”

The complaint alleges, “The Federal Deposit Insurance Corporation (the ‘FDIC’) has expressed concern with the practice of assessing multiple fees on an item. 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: Lawsuit
Topic: Contract
Tags: Insufficient or Non-Sufficient Funds Fees, More Than One Fee Assessed on a Single Item/Transaction, Your Bank