Los Angeles Credit Union Sued Over Lack of Consent, Overdraft Fees

Los Angeles, CAA troubling series of events have combined to foster an excessive bank overdraft fees lawsuit filed by a California woman who alleges her credit union not only got it wrong when it came to issuing what should have been standard forms, but also assessed overdraft fees based on improper amounts.

Mary Gray is the lead plaintiff in what is proposed as a class action. In her bank overdraft fees lawsuit against Los Angeles Federal Credit Union (LAFCU), Gray references a decision by the Federal Reserve Board (FRB) in 2010 that allowed for banks and credit unions to charge overdraft fees on ATM transactions and one-time debit charges provided members gave their consent via opt-in notices. Such notices were required by law to include dollar amounts of the overdraft fees charged.

There was one problem: rather than list the overdraft fee on the document as required by the FRB, the document referenced a different source for the fee information, rather than listing the fee on the original document as required by law.

Specifically, the bank overdraft fee lawsuit claims the document specified “for current fees, visit our website or ask us.”

This, according to the complaint, contravenes the requirements as outlined by the FRB, effectively canceling out consent by the member.

Further, according to the banking overdraft fees lawsuit, LAFCU erred in using available balances - rather than actual balances - in determining whether or not to assess overdraft fees.

“LAFCU’s practice when assessing an overdraft fee on a transaction is to ignore whether there is enough money to pay the transactions, and instead makes the automated decision on assessing overdraft fees based on an artificial internal balance (available balance) rather than the actual balance,” the lawsuit alleged. “While the available balance may be used for determining whether to authorize the transaction, it is directly contrary to the language in the contract and other materials to use it for purposes of assessing overdraft fees. The result is that LAFCU improperly charges members overdraft fees even when there is money in the account to pay the items.”

LAFCU operates eight branches in the greater Los Angeles area, with 54,000 members and $834 million in assets.

The proposed bank overdraft fees class action seeks to include anyone who might have incurred overdraft fees for ATM and non-recurring debit transactions on any LAFCU account dating back to September 2011.

The case is Gray v. Los Angeles Federal Credit Union, Case No. 2:2015cv07266, filed September 16, 2015 at California Central District Court.