WINSTON-SALEM, N.C.–Allegacy FCU here has reached a settlement in a case involving overdraft fees. The amount of the settlement was not disclosed, according to the Triad Business Journal.
The settlement comes six months after N.C. Business Court Judge Adam Conrad said there were “too many red flags to ignore.”
As CUToday.info reported here, in the case, originally filed in 2020, Terri Moose vs. Allegacy Federal Credit Union, Moose sued as a putative class representative for damages resulting from the alleged practices of the $2.2-billion Allegacy FCU in assessing overdraft fees for debit-card transactions (“APSN” or “Authorize Positive, Settle Negative” transactions).
Moose sued the credit union for breach of contract, unjust enrichment and unfair and deceptive trade practices under state law.
As CUToday.info has also reported numerous times, such APSN cases have been filed against credit unions across the country.
‘Significant Reservations’
A settlement in the case was delayed after the court expressed “significant reservations regarding the proposed settlement,” stating that there were too many “red flags” to ignore.
“Potential issues included the uneven allocation of settlement proceeds between Moose and her counsel, the lack of a fairness hearing, and the possibility of prejudice against absent class members,” JDSupra.com noted in October of 2023. “The substantial difference between the settlement payments to Moose and to her counsel may derail the entire case.”
Objections to Legal Counsel’s Fee
More specifically, as the Triad Business Journal noted, the “N.C. Business Court took issue with the fact that the settlement was several hundred times the $150 that Moose was charged in overdraft fees as well as the fact that Moose’s counsel would be awarded more than 95% of the settlement.”
Judge Conrad put a hold on the case because he said the original settlement appeared to be "a sweetheart deal or collusive payoff to prevent a class action case,” the report added.
In the new ruling, the plaintiff’s individual claims were dismissed with prejudice, meaning they cannot be brought back to court, while the putative class claims were dismissed without prejudice, meaning they can be refiled, the Triad business Journal said.
Conrad has now approved the new settlement, as well as the motion to have it sealed.
Credit Union Responds
“We appreciated Judge Conrad’s careful consideration of this matter to ensure that all parties’ rights were protected,” Tim Moore, Allegacy’s general counsel and chief risk officer, told the Winston-Salem Journal. “We have consistently denied the plaintiff’s allegations and underscore there was no finding of any liability or fault on Allegacy’s part. With that being said, we are also pleased to have this matter concluded so Allegacy can focus more on the future.”
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