VIENNA, Va.–Navy Federal Credit Union has agreed to settle a class action lawsuit over its overdraft fees for $24.5 million.
As CUToday.info reported earlier, Navy FCU is among many credit unions nationally that have been targeted in lawsuits and class actions over their overdraft practices. In this case, the class action settlement is with checking account holders who were charged overdraft fees under the credit union’s Optional Overdraft Protection Service between July 22, 2012 and Nov. 20, 2017, according to TopClassActions.com.
The lawsuit was filed by plaintiffs Jenna Lloyd and Jamie Plemons on behalf of others in the class. The plaintiffs alleged that the credit union assessed fees on debit card transactions deceptively. The case was originally filed in the U.S. District Court for the Southern District of California.
“According to the class action lawsuit, Navy Federal Credit Union would sequester checking account funds when members used their debit cards to cover the transaction, but would ‘hold’ the amount until debiting for the purchase at a later time,” TopClassActions.com reported. “The credit union would then allegedly debit the amount for the transaction, but would, in essence, charge twice — leading consumers into a negative balance and assessing an overdraft fee.”
The plaintiffs argued the Consumer Financial Protection Bureau has labeled this practice deceptive, and that Navy Federal had violated its own contractual agreements when it assessed overdraft fees in this manner.
Under the terms of the settlement agreement, Navy Federal Credit Union has agreed to pay $24.5 million which will be used as account credits or payments to class members, TopClassActions.com reported.
Class Members do not need to file a claim to obtain a payment or account credit; if the Navy Federal Credit Union overdraft fees class action settlement is approved, payment will be sent automatically to class members.
According to Law360.com, the attorneys who filed the lawsuit, Jeffrey Kaliel of Tycko & Zavareei LLP are seeking 25% of the class action settlement. As CUToday.info has reported, that law firm is also behind a number of other similar lawsuits filed against credit unions related to non-sufficient funds policies and overdrafts.