TBK Bank Overdraft Fees on APSN Transactions Class Action

The complaint for this class action claims that TBK Bank, SSB charges customers overdraft fees on debit transactions that were authorized on accounts that had sufficient funds. The complaint alleges that this practice is deceptive, breaches the bank’s deposit agreement as well as its OD Opt-In Form, and violates its duty of good faith and fair dealing.

The class for this action is all TBK Bank accountholders who, during the applicable statute of limitations, were assessed overdraft fees on debit card transactions that were authorized on sufficient funds and settled on negative funds in the same amount for which the debit card transaction was authorized.

The complaint alleges that TBK improperly charges OD fees on transactions that were authorized when the accounts had sufficient funds to pay them, through what are called Authorize Positive, Settle Negative (APSN) transactions.

How does this occur? When a customer goes to make a debit transaction, the bank compares the amount of the transaction with the amount of money in the customer’s account. If there is enough, it authorizes the transaction, then sets aside the amount of that transaction so that it no longer is reflected in the account’s balance.

These funds are no longer available to the customer and cannot be used for any other purpose. The complaint alleges, “As a result, customers’ accounts will always have sufficient funds available to cover these transactions because [TBK] has already held the funds for payment.”

But if another transaction then overdraws the account, the complaint alleges, the customer may still be charged an OD fee when the first debit transaction settles. This happens because of what the complaint calls “a secret batch posting process[.]” TBK’s “actual practice is to assay the same debit card transaction twice to determine if it overdraws an account—both at the time … of authorization and later at the time of settlement.”

The complaint suggests that “at the moment a debit transaction is getting ready to settle, [TBK] 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.” This added step turns it into an APSN transaction and allows TBK to charge an OD fee.

Because “a fee in such circumstances is counterintuitive to accountholders,” the complaint claims, “other banks and credit unions require their accountholders to agree to be assessed OD Fees on APSN Transactions.” However, according to the complaint, TBK Bank does not.

Article Type: Lawsuit
Topic: Contract
Tags: APPSN Transactions, Breach of Contract, Breach of the Covenant of Good Faith and Fair Dealing, EFTA, Overdraft Fees, Your Bank