Pendleton Community Bank Unfair OD Fees, Multiple NSF Fees Class Action

This class action about unfair bank fees makes two allegations against Pendleton Community Bank, Inc.: (1) that it charges overdraft (OD) fees for debit transactions that were authorized with sufficient funds in the account, and (2) that it charges multiple non-sufficient funds (NSF) fees on single items.

Two classes have been proposed for this action:

• The APSN Class is all Pendleton accountholders who, during the applicable statute of limitations period, held checking accounts with Pendleton and were charged an OD fee on a debit card transaction that was authorized on sufficient funds and settled on negative funds in the same amount for which the debit card transaction was authorized.
• The Multiple Fee Class is all Pendleton checking accountholders who, during the applicable statute of limitations period through the present, were charged multiple fees on an item on a Pendleton checking account.

(1) “Authorize Positive, Settle Negative” (APSN) Transactions

When a bank authorizes a debit card transaction, the complaint says, it checks to see that the account has sufficient funds, then removes the amount of the transaction from its “available balance.” The complaint alleges, “As a result, customers’ accounts will always have sufficient funds available to cover these transactions because [Pendleton] has already held the funds for payment.”

How, then, does Pendleton charge customers an OD fee on some of these transactions? It can do this because transactions happen in two stages—first, when the transaction is made and the consumer and swipes the debit card, and later, when the transaction is settled, and the funds are removed from the consumer’s account and sent to the merchant’s account.

The problem occurs if another transaction overdraws the account in between the two stages of the debit transaction, because, the complaint alleges, Pendleton “uses a secret posting process[.]”

The complaint claims this involves trying the transaction twice—the first time being when it was approved, and the second with the account in overdraft. However, the complaint points out that the account’s available balance does not change at all and does not need to, since the bank previously put aside the funds needed for the transaction.

(2) Multiple NSF Fees

This fee is charged when an item (such as a check or an ACH item) is presented for payment and Pendleton returns it for insufficient funds. But if the unpaid item is presented a second time to an account which still has insufficient funds, the complaint says that Pendleton will charge a second fee, whether it returns the item or pays it.

According to the complaint, this violates Pendleton’s own contract with its customers, which lists fees for “Overdraft/NSF Paid Fee Per Item” and “Overdraft/NSF Return Fee Per Item” each at $35. The complaint points to the “per item” designation, claiming, “Even if [Pendleton] reprocesses an instruction for payment, it is still the same ‘item.’ Its reprocessing is simply another attempt to effectuate an account holder’s original order or instruction.”

Article Type: Lawsuit
Topic: Contract
Tags: APPSN Transactions, Insufficient or Non-Sufficient Funds Fees, More Than One Fee Assessed on a Single Item/Transaction, Overdraft, Unfair Charges, Your Bank