CNB Bank faces a proposed class action over its alleged practice of charging $32 overdraft fees to customers whose account contain sufficient funds to cover individual transactions.
According to the 24-page lawsuit, CNB Bank has breached the terms of its customer account agreement, which states that overdraft fees will be assessed only when there is not enough money in an account to cover a transaction. Instead, CNB Bank has wrongfully charged consumers an overdraft fee even though their account contains sufficient funds to cover a given transaction, the suit claims.
The case alleges that the promises outlined in CNB Bank’s overdraft policy “fundamentally misconstrue and mislead consumers,” who generally understand that debit card transactions are reflected in their accounts immediately. Per the lawsuit, there exists “no justification for these practices” other than for CBN Bank “to turn its customers’ financial struggles into revenue” through the imposition of these fees.
Specifically, the lawsuit seeks to challenge CNB Bank’s practice of charging overdraft fees on “Authorize Positive, Settle Negative transactions,” or APSN transactions. According to the filing, an APSN transaction occurs when a consumer makes a transaction with a positive available balance, but after a subsequent transaction is processed, it leaves a negative balance and an overdraft fee is charged.
“Here’s how the practice works. At the moment debit card transactions are authorized on an account with positive funds to cover the transaction, Defendant immediately reduces consumers’ checking accounts for the amount of the purchase, sets aside funds in the checking account to cover that transaction, and adjusts the consumer’s displayed “available balance” to reflect that subtracted amount. As a result, customers’ accounts will always have sufficient funds available to cover these transactions because Defendant has already held the funds for payment.”
As the case tells it, the “entire purpose” of the immediate debt and hold of positive funds is to make sure an account contains enough money to pay a transaction when it settles. Nevertheless, CNB improperly charges overdraft fees on APSN transactions despite the fact that it has already reserved funds to cover a transaction and “[kept] the funds off-limits for other transactions,” the complaint says.
Beyond allegedly violating the conditions of its customer contract, CNB has also breached its duty of good faith and fair dealing by “abus[ing]” its “discretion to take money out of consumers’ accounts without their permission and contrary to their reasonable expectations that they will not be charged improper fees,” the lawsuit alleges.
The lawsuit looks to cover CNB Bank checking accountholders who, during the applicable statute of limitation period, were assessed an overdraft fee on a debit card transaction that was authorized on sufficient funds and settled on negative funds in the same amount for which the debit card transaction was authorized.
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