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Sunflower Bank Overdraft Charges on Debit Holds Class Action

Can a bank charge overdraft (OD) fees on a transaction that doesn’t overdraw an account? That’s what Sunflower Bank, NA does with certain debit card transactions, alleges the complaint for this class action. The complaint claims that this practice is unclear to consumers, breaches the duty of good faith and fair dealing, and violates the bank’s own account agreements.

The class for this action is all account holders who, during the applicable statute of limitations, were charged overdraft fees on APPSN transactions in a Sunflower checking account.

How can a bank charge an OD fee when there was never an actual overdraft? According to the complaint, the use of a process called Authorize Positive, Purportedly Settle Negative (APPSN) is at fault.

Normally, when a customer goes to make a debit transaction, Sunflower authorizes the transaction and reduces the customer’s available balance by the amount of the transaction. This is the Authorize Positive part of the APPSN transaction.

Those funds are then held aside, so that they can be used when the transaction finally settles—that is, when the funds actually leave the customer’s bank and are sent to the merchant’s bank. In the meantime, those funds in that “debit hold” are not available to the customer and cannot be used for anything else.

“As a result,” the complaint alleges, “customers’ accounts will always have sufficient available funds to cover these transactions because Sunflower has already sequestered these funds for payment.”

In between the debit transaction and the time when it settles, the customer may make other transactions. One or more of them may overdraw the customer’s account. If so, Sunflower may also count the original debit transaction, when it settles, as an overdraft. But how could that happen, given that the funds have already been set aside?

The complaint contends, “Upon information and belief, … at the moment a debit card transaction is getting ready to settle, Sunflower does something new and unexpected, during the middle of the night, during its nightly batch posting process. Specifically, Sunflower releases the hold placed on funds for the transaction for a split second, putting money back into the account, then re-debits the same transaction a second time.”

At this point, the account may still have an overdraft from the intervening transaction(s), and the Purportedly Settle Negative part of the APPSN transaction occurs: The account no longer contains sufficient funds to cover the previously-approved transaction.

The complaint alleges, “This discrepancy between Sunflower’s actual practices and the contract causes account[ ]holders to incur more OD Fees than they should.”

Article Type: Lawsuit
Topic: Consumer

Most Recent Case Event

Sunflower Bank Overdraft Charges on Debit Holds Complaint

June 2, 2021

Can a bank charge overdraft (OD) fees on a transaction that doesn’t overdraw an account? That’s what Sunflower Bank, NA does with certain debit card transactions, alleges the complaint for this class action. The complaint claims that this practice is unclear to consumers, breaches the duty of good faith and fair dealing, and violates the bank’s own account agreements.

Sunflower Bank Overdraft Charges on Debit Holds Complaint

Case Event History

Sunflower Bank Overdraft Charges on Debit Holds Complaint

June 2, 2021

Can a bank charge overdraft (OD) fees on a transaction that doesn’t overdraw an account? That’s what Sunflower Bank, NA does with certain debit card transactions, alleges the complaint for this class action. The complaint claims that this practice is unclear to consumers, breaches the duty of good faith and fair dealing, and violates the bank’s own account agreements.

Sunflower Bank Overdraft Charges on Debit Holds Complaint
Tags: Overdraft Fees, Unfair Business Practices