Legal Bulletins

Several credit unions in Maryland have been targets of class action lawsuits concerning overdraft practices.  A California firm that previously brought claims against several large banks (and obtained significant settlements) shifted its focus to credit unions.  At least two out-of-state credit unions subject to these claims have settled for large sums.  The class complaints fault the named credit unions for imposing overdraft fees based on "available balance" (actual balance less any pending transactions or anticipated debits) rather than actual balance at the time of item presentment.  The complaints are primarily based on breach of contract theories and point to language in credit union disclosures that overdraft fees will be imposed only when there are insufficient funds or when there are not enough funds in an account to cover a transaction.  We wrote in our April 2015 Maryland Legal Alert about the importance of maintaining carefully drafted account documentation and these overdraft cases are a reminder that all depository institutions should verify that their actual overdraft practices closely match the language of account disclosures.  Please contact Christopher Rahl for more information concerning this topic.