On Compliance: Keep it classy

Tips for steering clear of overdraft class action lawsuits.

With passage of the Dodd Frank Act in 2009, the financial services industry has become even more highly regulated. Not surprisingly, there has been a corresponding uptick in consumer class action litigation against financial institutions. In recent years, dozens of credit unions across the country have faced class action lawsuits relating to overdraft and non-sufficient funds fees.

The suits have been costly to credit unions and their membership. Years after the first wave of suits, new class action lawsuits relating to fees are still being filed, resulting in numerous multi-million-dollar settlements.

The suits filed in recent years typically challenge several different alleged “improper practices” relating to assessment of overdraft and NSF fees:

  1. Ordering transactions in an order different than they are made, such as processing larger payments before smaller ones, which allegedly causes more overdrafts;


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