Summit Credit Union Accused of Charging Unlawful Overdraft Fees

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Summit Credit Union is facing a Wisconsin man’s claims that the credit union charged consumers improper overdraft fees that violated its own policies and federal law. The suit is centered around an allegedly incorrect description of the defendant’s overdraft policy that informs consumers it will only charge overdraft fees “when you do not have enough money in your checking account to cover a transaction, but we pay it anyway.”

The complaint argues that the defendant breaches the terms of this opt-in contract by charging overdraft fees based on an “artificial balance” rather than the true amount of money in each consumer’s account, as specified in its overdraft policy.

“The artificial balance created by SCU which it used is not the customer’s actual money in the account,” the case reads. “Rather, it is the balance in a customer’s account minus anticipated future debits (debits that may or may not occur) and minus deposit holds.”

By subtracting from the available balance transactions that have not yet been applied to a consumer’s account and holds on recently deposited funds, the defendant improperly assesses overdraft fees on accounts that, in reality, have enough money to cover the transaction at issue, the suit alleges.

Moreover, even when transactions do result in a negative account balance, the case argues that the credit union is still not permitted to collect overdraft fees because it failed to accurately describe its overdraft service in the opt-in contracts to which consumers supposedly agreed and never actually obtained their “fully informed” consent.

Furthermore, the complaint claims the defendant automatically enrolls consumers with business accounts into its overdraft program, “regardless of whether they have affirmatively consented to such coverage, and even if they have indicated that they do not want this service.”