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Marlborough-based Digital Federal Credit Union will face a class action lawsuit that alleges the $8.5 billion asset institution unjustly charged overdraft fees, a federal judge ruled last week.
U.S. District Judge Timothy Hillman rejected a request from DCU to dismiss the case in entirety. Of the six motions brought by the lawsuit, the judge threw out two, but kept four of the plaintiff’s motions.
The lawsuit, which was first brought in June by DCU customer Brandi Salls, alleges that DCU assessed Salls multiple $30 overdraft fees when she in fact had sufficient funds in her account.
According to the lawsuit, Salls made a debit card purchase for about $37 on Dec. 14, 2014. After the purchase, Salls still had over $300 in her account, but was assessed a $30 “uncollected fee,” according to the lawsuit.
The same scenario allegedly happened to Salls a day later when she made another purchase on Amazon.
Salls alleges that her account balance was artificially low not only because there was a hold placed on deposits into her account, but also because DCU subtracted pending transactions from the ledger balance.
Salls believed she had enough funds in her account because the ledger balance – the money in the account without deduction for holds on pending transactions or on deposits–- showed there to be sufficient funds.
In her lawsuit, Salls claimed that DCU violated the opt-in contract with its customers because it promised to only address overdraft fees when there were not sufficient funds in the account.
She also claimed that DCU breached the account agreement because the contract never stated that it would deduct pending debit card transactions for purposes of determining “sufficient funds” when assessing an overdraft fee.
The other allegations by Salls include breach of good faith, unjust enrichment/restitution, money had and received and violation of regulation E, a Federal Reserve law that outlines steps consumers must follow in reporting errors and the steps a bank must take to provide recourse.
DCU in court documents motioned for a full dismissal of all motions based on Salls’ “failure to state a claim upon which relief can be granted.” DCU argues that its opt-in agreement and account agreement, which Salls agreed to, clearly defined the terms “available funds” and “overdraft.”
In this agreement, DCU does say there are minimum balances for accounts. Further, the credit union contends that “available balance” is “a well known banking term that has long been understood to mean the money in an account minus holds placed on funds to account for uncollected deposits and for pending debit transactions.”
In his ruling, Hillman states that DCU did not properly define “available balance” and its meaning is therefore ambiguous. He also ruled that it is reasonable for customers to assume DCU would not use the ledger balance when calculating overdraft fees.
