Redstone Federal Credit Union Multiple NSF Fees on One Item Class Action

Redstone Federal Credit Union (RFCU) charges a non-sufficient funds (NSF) fee of $25 when an item is presented for payment and it decides not to pay it because it would overdraw the customer’s account. But what happens when the same item is presented again, before more money has been added to the account? The complaint for this class action alleges that RFCU charges another NSF fee, and that that is not permitted by its account agreement.

The class for this action is all former RFCU checking account holders who, between the earliest date of the applicable statute of limitations and the date RFCU amended its disclosures, were charged multiple fees on the same item.

On May 22 and 25, 2018, the complaint alleges, one of the plaintiffs in this case, Beverly Macon, was charged two different $25 NSF fees. She was charged these fees on checks that were submitted for payment again, the complaint alleges, without her request to reprocess the transactions.

The other plaintiff, Savannah Garner, was charged $25 on December 21 and 23, 2015 on checks that were resubmitted for payment. The complaint claims that she had not asked to have the items resubmitted for payment.

Until recently, the complaint alleges, RFCU’s Fee Schedule said, under the heading “Non-Sufficient Funds Fees,” “Insufficient Funds Charge $25.00 per item,” and “Returned Item Chargeback Fee $25.00 per item.”

The complaint quotes what it alleges is an earlier version of Redstone’s account agreement as stating that NSF and/or overdraft fees “will be charged for each non-sufficient funds (NSF) item that will or would overdraw your account…”

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—Plaintiffs Macon and Garner took no action to resubmit the transaction.”

The complaint refers to an article in the Washington Post entitled, “I bought my kids dinner—and saw firsthand how overdraft fees punish the poor.” It quotes the article as saying that when banks charge NSF fees, they “are charging a fee for doing literally nothing… [T]his is like asking a friend if I can borrow $20, only to have him take $10 out of my wallet for turning down my request.”

Not all banks charge NSF fees every time an item is presented for payment. Some charge only one such fee per item, and a few charge no NSF or overdraft fees at all. The complaint doesn’t claim that charging multiple NSF fees is necessarily illegal, but it does say that the practice should be detailed in the financial institution’s account agreements, so that customers know what they’re agreeing to.

RFCU has now amended its account documents, but this class action concerns an earlier period when it charged multiple fees without disclosing that to customers.

Article Type: Lawsuit
Topic: Consumer
Tags: Insufficient or Non-Sufficient Funds Fees, More Than One Fee Assessed on a Single Item/Transaction, Your Bank