PSCU, Transit Employees FCU lawsuit quickly settled

At least one credit union wrapped up litigation in 2018 with some clarity.

In August, Transit Employees Federal Credit Union in Greenbelt, Md., filed a lawsuit against PSCU, a credit union service organization based in St. Petersburg, Fla. The $99 million-asset Transit claimed it was getting substandard call center services from the company.

The credit union industry has seen litigation on a number of fronts this year. Credit unions have been sued over their websites allegedly violating the Americans With Disabilities Act. Others faced claims that they incorrectly charged members overdraft fees.

A federal court has struck down parts of the National Credit Union Administration’s field of membership rule passed in October 2016. That case is ongoing as the regulator has appealed and the American Bankers Association has filed a cross appeal.

However, the Transit and PSCU litigation was different compared with other common lawsuits seen this year since it involved a credit union suing a CUSO. The two sides were able to come to an understanding just three weeks after that suit was filed. PSCU announced a settlement on Sept. 7 with neither party admitting fault or liability. The terms of the settlement were not made public.

Transit had sought damages of at least $15,000 in the suit, which was filed in the Circuit Court of Sixth Judicial Circuit in Pinellas County, Fla.

Transit did not to respond to requests for comment. PSCU declined to comment beyond a statement it released on the settlement in September.

“The settlement provides for a full and final settlement and release by each party of the other of all claims, counterclaims and liabilities of any nature related to the matter, without either party admitting any fault or liability,” PSCU’s previous statement said.

The credit union, which outsourced its call center operations to the CUSO in early 2017, claimed in the lawsuit that PSCU provided inaccurate information to members and sometimes kept callers on the line for as long as 50 minutes.

Transit also claimed that billing invoices exceeded its budget for the call center services. For example, in July 2017, PSCU sent Transit a bill in excess of $71,000, after the credit union specified it could not spend more than $12,000 per month.

After Transit sought to terminate its contract with PSCU in August 2017, the CUSO demanded arbitration and sought more than $141,000, along with liquidated damages for “improper early termination,” interest, attorneys’ fees and costs.