Court Overturns Ruling; Will Allow Overdraft Suit Against CU to Continue

ATLANTA–The 11th Circuit Court of Appeals has overturned a 2017 court ruling that had dismissed a potential class action lawsuit against LGE Community Credit Union over its overdraft practices.

11th Circuit

The litigation is similar to that faced by numerous other credit unions nationally that have been hit by a wave of lawsuits, nearly all filed by the same firms, that seek class action status on behalf of members and which allege credit union practices are causing members to overdraft accounts and incur fees when in fact there are funds available in the accounts.

The 11th Circuit Court of Appeals ruled U.S. banking law offers financial institutions no safe harbor from allegations that overdraft policies are unclear or misleading, according to Reuters. The court ruled a federal judge in Atlanta had erred in ruling that the safe-harbor provision of the Electronic Fund Transfer Act applied because the credit union had used a model form provided by the Federal Reserve Board, Reuters stated.

The $1.4-billion LGE Community CU is based in Marietta, Ga. and has approximately 114,000 members.

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