Mon, Jun 1, 2015
A new wave of class-action lawsuits may be headed CUs’ way, and this time they target overdraft programs.
Some say the lawsuits could lead to large losses in court.
Moreover, losses sustained from the suits would not be insurable, according to CUNA Mutual Group, which recommends that CUs make sure disclosures sufficiently and accurately describe the credit union’s overdraft practices.
CUNA Mutual reports that it is aware of four credit unions in California that have been hit with the lawsuits regarding their overdraft practices, noting that the lawsuits are not all coming from one legal firm. According to CUNA Mutual, the lawsuits against the credit unions allege that the fees are being improperly assessed on the available balance instead of the actual balance, the CU’s fee structure has not been clearly communicated, and that members are not being provided with accurate available balance information.
Some CUs assess overdraft fees based on the members’ available balance, rather than on the actual balance. CUNA Mutual Group explained that the suits allege that this situation causes confusion and may mislead members because assessing the fee on the available balance could lead to situations where overdraft fees are assessed even though the actual balance may not go negative.
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Source: CU Today Info