EFTA Settlements Proliferate Among CUs

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HOUSTON – JSC FCU is the latest of a growing list of credit unions that have agreed to set aside funds to settle consumers’ claims the credit union violated provisions of the notification provisions of the Electronic Funds Transfer Act.

The payments will settle claims that the credit union failed to post proper disclosures for surcharges it levied on non-members at eight of its Texas ATMs. Under the terms of the settlement, filed in the U.S. District Court for the Southern District of Texas, non-member users of the machines between Aug. 18, 2009, and Jan. 13, 2011, may be eligible to receive up to $100 for each time they used those ATMs.

The growing number of settlements comes amid a proliferation of suits against both credit unions and banks for allegations of violating the EFTA and/or the Expedited Funds Availability Act, which requires notice regarding the availability of deposited funds.

Credit unions see the settlements as preferable to paying fines up to $500,000 and attorneys fees for violating the EFTA. Under the law, the maximum that a group of people may recover in a case or group of cases alleging EFTA violations is the lesser of 1% of a credit union’s or bank’s net worth or $500,000.00, plus any actual damages that the members suffered.

In a separate case, Credit Union 1 of Rantoul, Ill., has agreed to pay ATM users to settle claims. A final settlement in the case is still pending but the terms have been posted by the federal court in Chicago.

Resource FCU in Tennessee also has agreed to settle a class action EFTA suit related to notices at one ATM inside Regional Hospital in Jackson, Tenn. The credit union has agreed to set aside $36,500 to pay up to $1,000 to people who used the ATM 1,400 times.

Jamestown Area Community FCU in New York has agreed to pay non-member users of its ATM up to $100 for each time they used the machine Aug. 21, 2009, and May 14, 2010, for failure to properly disclose surcharges assessed non-members.

Friday, Credit Union Journal reported a similar settlement on ATM disclosures by LA Financial FCU with users of its six California and Arizona ATMs.


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