United Federal Credit Union settles overdraft suit for $1.8M

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United Federal Credit Union in St. Joseph, Mich., has settled a class action lawsuit regarding its overdraft practices for almost $1.8 million.

The settlement covers members who were charged overdraft fees from Oct. 3, 2011, to Sept. 30, 2018, but “had sufficient funds in the ledger balance but not the available balance,” according to a website set up for the settlement. Members who were charged overdraft fees for debit card and ATM transactions for the first time between Aug. 15, 2010, and Sept. 30, 2018, are also covered by the settlement.

Besides the monetary award, United also agreed to change the language in its account agreement and Regulation E Opt-In form for at least the next three years to state that the available balance is used to determine overdraft charges, according to the settlement agreement.

The lawsuit claimed that United did not “properly opt members into its overdraft program for ATM and debit card payment transactions,” according to the settlement website. The $2.9 billion-asset United also incorrectly charged overdraft fees when members had enough money in their ledger balances for their checking accounts – though not in available balances – to cover a transaction, according to the website.

United did not immediately return a request for comment. The credit union claimed that it charged the proper overdraft fees based on members’ available balances, according to the settlement website.

A number of credit unions, including Navy Federal Credit Union, Mazuma Credit Union and VyStar Credit Union, have been hit with lawsuits regarding their overdraft practices in recent years.

The United lawsuit was filed in September 2015 with Tonya Gunter as the named plaintiff in the U.S. District Court for the District of Nevada.

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