Sunmark Credit Union Hit with Class Action Over Alleged Insufficient Funds Fee Practices

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Sunmark Credit Union faces a proposed class action over its alleged practice of charging multiple insufficient funds (NSF) or overdraft fees for a single transaction.

Per the case, the credit union’s contracts with accountholders allow for a single $30 NSF or overdraft fee to be charged when a customer’s account balance drops too low to cover a particular “item,” i.e., a check, withdrawal or service charge. Those same contracts, however, say nothing as far as allowing the defendant to charge multiple fees per item, the lawsuit says.

According to the suit, Sunmark customers have been financially injured “to the tune of millions of dollars bilked from their accounts” as a result of the credit union’s improper overdraft practices.

The plaintiff, an LLC owned and operated by a New York resident, says the defendant, on several occasions, initially rejected an ACH payment due to insufficient funds in the business’s account and charged a $30 NSF fee, which is not under dispute. The suit alleges, however, that the credit union went on to charge the plaintiff an additional NSF fee when it reprocessed the same item the next day or two days later.

“In sum, Sunmark assessed Plaintiff $60 in fees in its failed effort to process a single payment,” the complaint states.

Per the case, Sunmark’s overdraft and NSF fee practices contradict the credit union’s express representations in its account documents, which state that credit union will assess a single $30 fee for an item returned for insufficient funds or paid into overdraft. The lawsuit argues that a transaction is not considered a new item each time it is rejected for payment and reprocessed, especially when the customer “took no action” to resubmit the item.

“Even if Sunmark reprocesses an instruction for payment, it is still the same item,” the complaint attests. “The Credit Union’s reprocessing is simply another attempt to effectuate an accountholder’s original order or instruction.”

According to the suit, nowhere in Sunmark’s account documents does the credit union state that its reprocessing of transactions will be treated as separate items that incur additional fees, nor do customers agree to such. Moreover, other banks and credit unions who do employ “this abusive multiple fee practice” expressly disclose such to customers in their account documents, the case says.

Sunmark’s decision to assess multiple NSF fees for a single attempted payment was made in “bad faith and totally outside Plaintiff’s reasonable expectations,” the suit argues.

The lawsuit looks to cover all Sunmark accountholders who were charged multiple fees on the same item during the applicable statute of limitations period, with a proposed subclass of New York accountholders.

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