Suit Challenges CU Gift Card Fees

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EDWARDSVILLE, Ill. – A member of 1st MidAmerica CU is suing the one-time Olin Community CU saying administrative fees the credit union charged on a Visa gift card she bought for her father-in-law for Christmas have wiped out virtually all of the $50 value of the card.

The suit, filed in state court, says the credit union began charging administrative fees even before the card was activated, eliminating as much as a third of its value by the time the member, Karen Hughes, gave to her father for a Christmas in 2007.  

Rhodes claims that she purchased a $50 Visa Gift Card with a “Valid Thru” date of “12/28” imprinted onto the face of the gift card. Unknown to her, the actual value of the Visa Gift Card was only $35 at the time she purchased it because the defendants had imposed administrative fees of $2.50 per month before she even purchased it, according to the suit. These administrative fees continued to be deducted from the gift card each month without her knowledge until she used it for the first time in late November, early December 2008, before the "Valid Thru" date expired, and realized the gift card only had $2 left on it.

The member claims because the fees were not disclosed as part of the transaction the credit union is violating the state’s Consumer Fraud and Deceptive Business Policies Act.

The member is asking the court to declare a class action for everyone who bought gift cards from the credit union around the same time and to repay them the costs of the administrative fees.

The suit names as defendants 1st MidAmerica CU in Nethalto, Ill., Visa Inc., and tiny Services CU, in Naperville, Ill.
Officials with the credit union did not respond to a phone call seeking comment.

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