This class action is one of a number of recent ones taking issue with the practice of imposing multiple non-sufficient funds (NSF) fees on a single transaction. The complaint claims that Bethpage Federal Credit Union violates its own account agreements by doing so.
The class for this action is all Bethpage checking account holders in the US who, during the statute of limitations, to whom Bethpage charged multiple NSF fees on the same item.
When a customer initiates a transaction in an account that does not have the funds to cover it, a financial institution can do one of two things: either (a) pay the transaction, causing an overdraft, and charge the customer an overdraft fee, or (b) reject the transaction and charge the customer an NSF fee.
In this case, plaintiff Catherine Corbett tried to make a payment to Mid-Island Mortgage on May 2, 2019. Since her account did not have sufficient funds to cover the payment, Bethpage rejected the transaction and charged her a $30 NSF fee. The complaint takes no issue with this.
However, four days later, and without any additional request by Corbett, Bethpage again processed the same transaction. Since the account still did not have sufficient funds, it again rejected the transaction it had reinitiated and charged Corbett a second $30 NSF fee.
The complaint alleges that Bethpage’s account documents “indicate that only a single NSF Fee will be charged per ‘item’…”
It adds, “An electronic item reprocessed after an initial return for insufficient funds, especially through no action by the customer, cannot and does not fairly become a new, unique item for fee assessment purposes, particularly here where Bethpage reprocesses the items knowing there are insufficient funds.”
The complaint provides examples of banks (such as Chase) who charge only one NSF on an item, no matter how many times it is reprocessed.
Then it quotes from the account documents of other banks that charge a new fee every time the item is processed, but who make this clear up front. For example, First Citizens Bank’s documents say, “Because we may charge you a service fee for an NSF item each time it is presented, we may charge you more than one service fee for any given item.”
Still other banks’ documents define “item” differently when they state that each time a transaction is presented, it is regarded as a new item.
Bethpage has not done any of these things. The complaint says that Bethpage’s charging the additional NSF fees, especially when the customer has not requested a reprocessing, breaches its duty of good faith and fair dealing.