An MUFG Union Bank, N.A. customer has filed suit against the institution over its alleged practice of charging account holders unlawful continued overdraft fees. In particular, the case claims if customers’ accounts remain overdrawn for more than six consecutive days, the bank will charge them an additional $6.00 fee per day for up to six days—on top of the initial $33.00 overdraft charge.
“Unlike the initial overdraft fee,” the case poses, “this additional fee is charged although Union Bank has provided nothing new in the way of services to the consumer other than advancing the original money to the consumer’s account to cover the initial overdraft.”
The complaint claims “Continued Overdraft Fee” is a misnomer and that the additional charges instead act as interest that accrues when the bank extends credit to customers by covering their overdrafts. The suit argues that the defendant violates state law and the federal National Bank Act by demanding an excessive amount of interest, often charging customers more than 500 percent of small overdrawn amounts.
The plaintiff, according to the complaint, overdrew her account by $29.82 and paid a total of $30.00 in “interest,” representing an annual interest rate of over 1,000 percent.