ARLINGTON—If a credit union is hit with an overdraft class action lawsuit, what might it expect? As CUToday.info has reported, numerous credit unions have been hit with class action suits over their overdraft policies, including by law firms specializing in such suits. Now, NAFCU Vice President of Regulatory Compliance Brandy Bruyere is providing some high-level information to help CUs prepare in case the wave of overdraft suits impacts their organization.
According to Bruyere, the following are key elements/claims in the suits against many financial institutions:
- Violations of Regulation E, even where a credit union utilized the rule's model form
- Assertions that the account agreement was violated when the account balance was calculated inappropriately and fees were assessed
- Multiple state law claims
"More recently, the Regulation E claims are not as frequently seen in these cases," said Bruyere. "This may be in part because the Electronic Funds Transfer Act, which is implemented by Regulation E, only allows one year for bringing a claim to court."
What About Motions to Dismiss?
Bruyere also addressed motions to dismiss in some pending lawsuits against credit unions.
"Overall, when reviewing motions to dismiss in the light most favorable to the plaintiff, courts in multiple states have found some merit to claims that account agreements are ambiguous as to when overdraft or NSF fees will be assessed," Bruyere said. "To mitigate future risk, many credit unions have already reviewed their account agreements and overdraft opt-in agreements with outside counsel, considering various court outcomes in the jurisdictions where they operate."