CUNA and the Georgia Credit Union League, along with NAFCU, filed an amicus brief Friday in the U.S. Court of Appeals for the 11th Circuit in defense of a credit union hit with a frivolous lawsuit over overdraft services.
The case, Tims v. LGE Community CU, is one of 30 putative class actions brought against credit unions and other community institutions challenging their method of assessing overdraft fees based on the "available balance" rather than the "ledger balance" in customer accounts.
“Our brief identifies crucial regulatory history as well as a critical due process argument,” said Leah Dempsey, CUNA senior director of advocacy and counsel. “CUNA's assistance is particularly warranted in light of the fact that this is the first federal appellate court to consider the issues presented. And, many credit unions are facing ‘gotcha’ litigation on this issue based on highly technical alleged violations.”
The brief notes that credit union members continue to choose overdraft services and continue to indicate that they want it as an option. Members enjoy the security and peace-of-mind of knowing a transaction will go through, evidenced by the fact that over half of all credit union members currently have overdraft services active on their accounts.
With over half of all credit union members choosing to use overdraft services, CUNA has strong interest in this litigation to seek a resolution that ensures members can continue to have an option that they continue to indicate they want.
Many small credit unions have been forced to enter into costly settlements, and CUNA maintains these cases can and should be decided as a matter of law at the motion to dismiss stage to protect the rights of financial institutions--including its not-for profit, membership-based credit unions, and the members of the credit unions, who are ultimately funding the settlements.