Madison - St. Clair Record

Friday, December 6, 2019

Credit union accused of deceptive practices over its charging of overdraft fees; Class action sought

State Court

By John Breslin | Nov 25, 2019

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BELLEVILLE - A credit union customer is seeking class action certification over claims that the financial institution engages in deceptive practices in its charging of overdraft fees.

Edwardsville-headquartered Scott Credit Union faces a lawsuit alleging violations of the Illinois Consumer Fraud and Deceptive Practices Act. It was filed Nov. 12 in St. Clair County Circuit Court by plaintiff Ginger Darty.

The plaintiff claims the credit union assesses "overdraft fees on transactions that do not actually overdraw" and two or more fees for non-sufficient funds even where there is a single transaction.

Scott is accused of breaching its duty of good faith and fair dealing as well as unjustly enriching itself.

According to the complaint, transactions using a debit card are authorized when an account is in the black. The amount in a checking account is immediately reduced, which is reflected in the available balance.

However, the suit claims that the credit union "sets aside funds in a checking account to cover" a transaction which means there is always sufficient funds apparently available.

"Despite putting aside sufficient available funds for debit card transactions at the time those transactions are authorized, Scott later assesses overdraft fees on those same transactions when they purportedly settle days later into a negative balance," the suit states.

It means that when "any subsequent, intervening transactions are initiated on a checking account, they are compared against an account balance that has already been reduced." Later transactions then attract overdraft fees.

"The Consumer Financial Protection Bureau ("CFPB") has expressed concern with this very issue, flatly calling the practice 'unfair' and/or 'deceptive'," according to the suit, which also accuses the defendant of breach of contract.

Darty, who is seeking class action certification on behalf and others similar affected, is represented by David Cates and Chad M. Mooney of Cates Mahoney in Swansea, Lynn A. Toops of Cohen & Malad of Indianapolis, J. Gerard Stranch IV and Martin F. Schubert of Branstetter, Stranch & Jennings of Nashville, Tenn., and Christopher D. Jennings of the Johnson Firm In Little Rock, Ark.

St. Clair County Circuit Court case number 2019-L-793.

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