ARLINGTON, Va.–Credit unions could be facing a wave of class-action suits related to overdrafts policies.
Analysts who spoke with CUToday.info said increased litigation certainly seems likely given a new website specifically aimed at credit union members who have been charged overdraft or insufficient funds fees on their accounts regarding their use of a debit card.
The site, CreditUnionClassAction.com, is seeking CU plaintiffs, stating: “Are you a credit union member? Have you been charged overdraft fees or insufficient Funds Fees On Your Checking Account? We are investigating several credit unions, including California Bank & Trust (which is not a credit union), Star One, First Technology Federal, Alliant, SchoolsFirst Federal, PenFed, and other credit unions, for engaging in potentially unfair business practices related to overdraft fees on accounts when a debit card is used.”
The site is run by the Southern California-based law firm Marlin & Saltzman, LLP. There is a reportedly a related social media marketing campaign to source potential plaintiffs as well, using ads on Facebook. These ads encourage consumers to contact the firm to discuss, with an aim towards filing class action lawsuits.
Similar Strategy
The website and strategy is similar to that in which credit union members were sought to become plaintiffs in litigation over CU websites and alleged violations of the Americans With Disabilities Act (ADA).
“Is this another ADA? I don’t think it’s exactly the same thing, said NAFCU Executive Vice President of Government Affairs and General Counsel Carrie Hunt. “Credit unions and banks have been facing overdraft litigation for years. I certainly think that the plaintiffs’ attorneys having a website for class action is new for overdrafts. But a website for class-action suits is very common and a typical tactic on the part of lot of these attorneys. We saw it during patent litigation and certainly with ADA mass litigation.”
CUNA Chief Advocacy Officer Ryan Donovan said the good news, for now, is the number of overdraft lawsuits is low.
“Maybe only in the single digits,” he said. “But the fact they have a website and are advertising for consumers who feel they may have been wronged by their financial institution…It’s like personal injury attorneys who advertise on TV encouraging folks to sue. But this is something credit unions have to be on the lookout for—no doubt about it.”
Michael Moebs, economist and CEO at Moebs $ervices, which specializes in overdraft pricing and guidance, noted that overdrafts have always been subject to “nuisance suits since Truth-in Savings, Reg DD, went into place in 1993 or 25 years ago. Recently these nuisance suits have shifted to class-action suits. Whether individual or class action, these lawsuits are nuisances. However, this is not a threat to take lightly."