Local credit unions are a popular alternative for those who prefer not to bank with larger, corporate bank entities. However, while many credit unions attract consumers with the promise of lower fees than their big bank competitors, recent reports indicate that many credit unions have actually been sticking customers with large overdraft fees on ATM withdrawals, debit card transactions and checks, often at a much higher rate than banks and without disclosing the fee increases to their members.
In light of this information, consumers across the country have been filing class action lawsuits against their local credit unions. These lawsuits have uncovered that credit unions are feeling the effects of fewer consumers overdrawing their accounts – an area where financial institutions often make considerable extra income. Without the revenue from overdraft fees, some credit unions are being accused of getting creative with their fees in order to make money on their consumers. Consumers have reported that their credit unions have been increasing the amount they charge consumers when they use their account and processing transactions out of order with the intention of maximizing how much they can charge in overdraft fees.
If you have accounts with your local credit union and have noticed discrepancies in the fees you are being charged, contact an attorney from Atkins & Markoff today. The Consumer Financial Protection Bureau is currently investigating overdraft fee practices and is expected to release a series of new rules within the year. However, many credit union members who have already been affected by the unfair practices of credit unions deserve to be represented.
Understanding Overdraft Fees
Credit unions and banks charge overdraft fees when a consumer does not have enough money in their account to pay for a transaction. When a transaction is showing on the financial institution’s end, but the consumer does not have enough funds, the credit union can choose to let the transaction through —at a price. Also known as insufficient funds fees or courtesy pay fees, overdraft fees are imposed when a credit union makes the transfer of funds to a vendor even though there were not sufficient funds in the consumer’s account.
About Current Credit Union Overdraft Fee Lawsuits
The recent revelation that credit unions are unfairly charging overdraft fees has come as quite a surprise to many, as credit unions are non-profit organizations that are supposed to be run cooperatively by all its members. In recent years, credit unions have been accused of a handful of unlawful business practices in regards to the types of fees they are charging. In light of these developments, numerous class action lawsuits have been filed against credit unions. In these lawsuits, credit unions are accused of failing to disclose fee structures, mismanaging funds and other improper financial practices.