OVERLAND PARK, Kan.–Mazuma Credit Union here has agreed to pay nearly $1.4 million to settle a class action lawsuit over its overdraft policies.
As has been the case with litigation against several other credit unions, the lawsuit alleged Mazuma was charging overdraft fees on accounts even though there were sufficient funds on hand to cover the expense. Similar to other lawsuits as well, the plaintiffs argued Mazuma CU was using the “available balance” instead of “current balance” to determine available funds.
The lawsuit, with Joy L. Bowens as the lead plaintiff, alleged “available balance” contradicted language used in the credit union’s member account agreements. The settlement agreement states Bowens opened an account with the credit union in mid-1998, and further alleged she was charged overdraft fees as the result of Mazuma incorrectly finding she had insufficient funds. Under terms of the agreement, any Mazuma member who had a checking account at the CU between April 2011 and Sept. 30, 2015, and who was charged an overdraft fee is eligible for recoveries.
Changing Method
In addition, Mazuma Credit Union agreed as part of the settlement to begin using “current balance” to determine funds availability and whether an overdraft fee is to be charged.
According to the suit, Bowens opened her Mazuma credit union account at a branch in Kansas City in July 1998. Bowens alleged that Mazuma’s automated program incorrectly determined she had insufficient funds in her account and charged a fee.
The settlement agreement can be found here.