MADISON, Wis.–A lawsuit has been filed against Summit Credit Union here that alleges it has improperly charged overdraft fees on some members.
The credit union is denying the allegation. It marks the second such case brought against a Wisconsin credit union in the past year.
The lawsuit was filed in U.S. District Court for the Western District of Wisconsin and alleges that Summit did not specifically spell out that pending debit card transactions would be part of a calculation used to determine how much money was available in a checking account. The suit was filed by Matthew Domann of Portage, Wis., and cites instances in which he alleges he was improperly charged overdraft fees when he actually had a positive balance.
“The lawsuit alleges that in its opt-in contract with members, Summit stated, ‘An overdraft occurs when you don’t not have enough money in your checking account to cover a transaction, but we pay it anyway’,” according to the Milwaukee Journal-Sentinel. “The lawsuit contends that Summit should have said the available balance would be reduced by any pending debits, which may or may not occur.”
‘Improperly Charged Fees’
“Not only is the practice of using this artificial balance method rather than the money actually in the account to determine whether a transaction results in an overdraft and thus is subject to an overdraft fee directly contrary to (Summit’s) opt-in contract, but such practices have resulted in (Summit) improperly charging unlawful overdraft fees,” the lawsuit asserts, the Journal-Sentinel reported.
Summit CU President/CEO Kim Sponem told the Journal-Sentinel she could not comment in detail on pending litigation, but did state, “We do deny the allegations in the complaint. We do intend to take whatever action is necessary to defend against the claims. We only exist for the purposes of our members, and we do always act with the best of intent for our members and we will continue to do so.”
Domann is alleging that in February 2017 he had a balance of $85.51 in his checking account when he made a debit card purchase for $4.63. However, in the suit he states a $25 overdraft fee was assessed against his account.
Second Lawsuit in Wisconsin
In 2017, a similar lawsuit was filed against Landmark Credit Union in New Berlin, Wis. The Journal-Sentinel noted both lawsuits were filed by the same Milwaukee and California law firms.
While denying it did anything improper, Landmark Credit Union agreed as part of a settlement to establish a $950,000 settlement fund, according to court documents. The proposed settlement also calls for Landmark to waive collection of about $88,100 in overdraft charges it had assessed but not yet collected, the Journal-Sentinel reported.