in Newswire Published on July 26, 2023

Navy Federal Credit Union Charges Unfair ‘Junk Fees’ for Failed Deposits, Class Action Says

King v. Navy Federal Credit Union et al.

Filed: July 21, 2023 ◆§ 2:23-cv-05915

A class action lawsuit claims Navy Federal Credit Union has unlawfully charged accountholders a $15 “junk fee” when they attempt to make a deposit to their account that fails because it could not be processed against the originator’s account.

Defendant(s)

Navy Federal Credit Union

Law(s)

California Unfair Competition Law

State(s)

California

Categories

Fraud

A proposed class action lawsuit claims Navy Federal Credit Union (NFCU) has unlawfully charged accountholders a $15 “junk fee” when they attempt to make a deposit to their account that fails because it could not be processed against the originator’s account.

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The 14-page lawsuit says that NFCU “unfairly” charges a so-called “returned checks, deposited or cashed” fee on a failed deposit, which is returned unpaid if it cannot be processed. The case says NFCU assesses the fee even when the credit union has not actually cashed or deposited the funds into the account and the funds have not been used by the accountholder.

The suit alleges that, in doing so, the defendant has violated the terms of its own contract, which authorizes NFCU to assess “returned checks, deposited or cashed” fees only when it has actually deposited the funds into a consumer’s account, the individual has used the funds and the company must then try to recoup the spent funds.

In particular, NFCU’s deposit agreement and fee schedule represent to consumers that “there will be no Returned Checks, Deposited or Cashed Fees assessed where the funds were not actually made available to the accountholder,” the case relays.

“Where there is no cash provided—in other words, where only an attempted deposit occurs—NFCU is not authorized by contract to assess a Cashed or Deposited Item Returned Fee,” the complaint contends.

As the suit tells it, consumers are led to expect that they will only be charged such fees when they are actually provided and use the funds from an attempted deposit that is later reversed. Therefore, the filing claims that it is misleading and unfair to charge so-called “returned checks, deposited or cashed” fees when no actual deposit or check cashing has taken place.

“The fee is not, after all, called an Attempted Cashed or Attempted Deposited Returned Check Fee,” the lawsuit argues.

“NFCU’s practice is unlawful, unfair, deceptive and in violation of state consumer protection law because [the plaintiff] and the putative class members have no control whatsoever over whether the item attempted for deposit would be returned. Nor can the attempted depositor verify with the check originator’s depository institution prior to depositing an item whether there are sufficient funds in the issuer’s account for it to clear.”

The lawsuit looks to represent any Navy Federal Credit Union accountholders who, during the applicable statute of limitations period, were charged “returned checks, deposited or cashed” fees on attempted deposits that were returned.

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