Keesler Federal Credit Union Charged Fees for ‘Futile’ Overdraft Protection Transfers, Lawsuit Alleges

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A proposed class action has been filed over Keesler Federal Credit Union’s alleged practice of automatically initiating its overdraft protection service—and charging consumers a fee—even when doing so does not prevent an accountholder from being assessed an overdraft fee.

Keesler’s account documents, the 10-page lawsuit alleges, deceive consumers as to the amount they’ll be charged in the event they overdraft a checking account. According to the case, accountholders would never expect that Keesler’s overdraft protection service—whereby the credit union transfers funds from a customer’s other accounts to purportedly cover overdrafts on their checking account—would fail to prevent an overdraft and cause them to be assessed two separate fees.

The purpose of Keesler’s overdraft protection and prevention service is to prevent overdraft transactions and the assessment of a $25 overdraft fee, the case attests. Nevertheless, Keesler, the lawsuit claims, automatically initiates the service, and charges customers a $2 pre-transfer fee for such, even when doing so would be “wholly futile,” i.e., when the transfer is insufficient to prevent an overdraft on the customer’s checking account.

In these instances, the suit says, the credit union’s purported service does “nothing to accomplish its supposed purpose,” and instead causes customers to be charged an additional fee on top of the $25 overdraft fee that Keesler’s transfer was represented as able to prevent.

“The entire purpose of the overdraft transfer is to ‘cover an insufficient item,’” the complaint reads. “Yet the futile ODT Fees described above simply increase the total overdraft fees paid to $27 per transaction, not the $25 per transaction listed in the Fee Schedule.”

The lawsuit alleges that it was in “bad faith and totally outside Plaintiff’s reasonable expectations” for the defendant to transfer funds from another account and assess a fee for doing so when the transfer “had no preventative purpose.”

According to the complaint, Keesler’s customers have been financially injured “to the tune of millions of dollars taken from their accounts” as a result of the credit union’s allegedly illegal fee practices.

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