Mountain America Federal Credit Union (“Mountain America”), is one of Utah’s largest credit unions with over $8.5 billion in assets and 740,000 members.
Franklin D. Azar & Associates (“FDAzar”) filed Chas Beaman v. Mountain America Federal Credit Union, Case No. 1:19-CV-00053-PMW, District of Utah, Central Division. after its investigation revealed that Mountain America had a routine business practice of assessing overdraft fees on transactions that did not actually overdraw the account.
Nature of the Claims Against Mountain America Credit Union
This class-action lawsuit accuses Mountain America of misleading the Plaintiff and other putative class members in its handling of debit card transactions, leaving them burdened with “crippling” overdraft fees that they should not have incurred.
Typically, a charge on a debit card results in an immediate reduction in the balance of the user’s checking account; if the consumer has enough funds in the account to cover the transaction, no overdraft charges are warranted. According to the lawsuit, Mountain America sequesters the funds needed to pay a debit transaction, subtracting the dollar amount from the customer’s available balance, just as other banks do. But if the account is then subject to an “intervening transaction” — for example, a check drawn on the account subsequent to the debit charge exceeds the available balance — then Mountain America has been known to assess $25 overdraft fees not only on the overdrawn check but on the debit charge as well
Most consumers assume that debit card expenditures are immediately withdrawn from their accounts. The ease of use is one reason for the growing popularity of debit cards “as a budgeting device,” the complaint notes, “because they do not allow debt like credit cards do, and because the money comes directly out of a checking account.” But by allowing later transactions to consume available funds previously sequestered for a certain debit transaction, Mountain America extracts overdraft fees on transactions “that no reasonable consumer would believe could cause overdraft fees.”
The practice is not disclosed in the contractual documents provided to members. “MACU’s practice of charging [overdraft] fees even when sufficient funds exist to cover a transaction violates a contractual promise not to do so,” the lawsuit states. As a result of Mountain America’s actions, Plaintiff Chas Beaman and the other putative class members were harmed and therefore seeks compensation for their losses.
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