Redstone Federal Credit Union OD Fees Without Overdrafts Class Action

The complaint for this class action alleges that Redstone Federal Credit Union (RFCU) charges customers overdraft (OD) fees or non-sufficient funds (NSF) fees on transactions that do not actually overdraw accounts.

The class for this action is all RFCU checking account holders who, during that applicable statute of limitations, were charged OD fees or NSF fees on items that did not overdraw their checking accounts.

The complaint quotes Redstone’s Account Agreement as saying that an overdraft is a transaction “presented against nonsufficient funds” in a person’s account or for items “that will or would overdraw your account.” Its Overdraft Form says, “An overdraft occurs when you do not have enough money in your account to cover a transaction, but we pay it anyway.”

However, the account statement for plaintiff Heather Leslie shows that her account balance was not negative when she was charged OD fees on certain transactions.

For example, on June 28, 2019, RFCU charged Leslie an OD fee for an $18.88 payment she made to Capital One. However, her bank statement shows, as the complaint says, that “her account never went negative and always had sufficient funds to cover the item.”

The complaint contends, “By using some other, unspecified calculation—as opposed to the actual money in an accountholder’s account—to determine whether to assess an OD Fee or NSF Fees, RFCU increases the number of OD Fees and NSF Fees it assesses on accountholders.” It further states, “This manufactured balance is not the official balance of the account, and it is not the balance provided to accountholders in their monthly statements from RFCU…. Ms. Leslie and class members could not reasonably have expected that RFCU would assess OD Fees or NSF Fees in this manner.”

The complaint alleges that the OD charges are an act of bad faith on RFCU’s part: “RFCU grants itself discretion to charge—or not to charge—an OD Fee or NSF Fee on a given item. When it charge an OD Fee or an NSF Fee on items that do not actually overdraw an account, RFCU engages in bad faith and contradicts reasonable customer expectations.”

Also, Regulation E requires that banks present disclosure to customers opt in to overdraft programs that permit them to charge overdraft fees when accounts don’t have sufficient funds to cover a transaction.

The complaint alleges that RFCU has breached its contract and the covenant of good faith and fair dealing and violated the Electronic Funds Transfers Act.

Article Type: Lawsuit
Topic: Consumer

Most Recent Case Event

Redstone Federal Credit Union OD Fees Without Overdrafts Complaint

May 5, 2020

The complaint for this class action alleges that Redstone Federal Credit Union (RFCU) charges customers overdraft (OD) fees or non-sufficient funds (NSF) fees on transactions that do not actually overdraw accounts.

Redstone Federal Credit Union OD Fees Without Overdrafts Complaint

Case Event History

Redstone Federal Credit Union OD Fees Without Overdrafts Complaint

May 5, 2020

The complaint for this class action alleges that Redstone Federal Credit Union (RFCU) charges customers overdraft (OD) fees or non-sufficient funds (NSF) fees on transactions that do not actually overdraw accounts.

Redstone Federal Credit Union OD Fees Without Overdrafts Complaint
Tags: Overdraft Fees, Your Bank