The NAFCU Journal July-August 2020 - 14

OVERDRAFT

Overdraft policies constitute the biggest
area of litigation activity that NAFCU
is witnessing among credit unions and
throughout the financial services sector,
says Carrie Hunt, executive vice president
of government affairs and general counsel
for NAFCU. One round of class actions
is questioning whether credit unions
can perform certain activities based on
the terms of their account agreements.
Courts are approaching the cases differently, Hunt says. In some cases, they are
reviewing only the underlying contractual
disputes. In others, they are considering the obligations put on credit unions
under the Consumer Financial Protection
Bureau's Regulation E, its rules pertaining
to account agreements.
"These lawsuits are quite varied," Hunt
says. Plaintiffs and plaintiffs' attorneys
"are trying to grasp any potential issue to
claim these consumers weren't put
on notice."
Overdraft complaints can be fueled by
the complexities of posting and processing transactions, making them hard to
explain in agreements, says Hal Scoggins, attorney at Farleigh Wada Witt in
Portland, Ore. Add to that an "innate
distrust of financial institutions," he
says, and plaintiffs' attorneys can easily
find potential plaintiffs for threatened
class-action suits. "Those can be incredibly time-consuming and difficult to
defend, even if the credit union is doing
absolutely everything right."
One common lawsuit involves claims
of a credit union charging overdraft
fees when a member's debit card

transaction is approved and intervening transactions by debit card, check or
withdrawal lead to a negative balance
when the debit card transaction clears
later, Scoggins says. In another, credit
unions have been accused of charging
returned-check fees at the initial
presentment and also when the payee
sends the check through a second time.
Claimants say the practice is inconsistent with disclosures that provide for a
fee charged "per item."
"There's going to be a shakeout period
where we start to get rulings from the
courts on those two particular claims,
and that will dictate what happens in
the next wave - whether this wave dies
out, or whether plaintiffs encouraged by
positive rulings continue filing and ramp
up their efforts," Scoggins says.
In recent years, Bredehoft has seen
hopeful signs in the clarity of account

''

agreements. Although agreements are
longer, "we're seeing them written in
extraordinarily plain English, with words
of no more than two syllables, that
would be virtually impossible to read
and misunderstand."

FCRA AND COLLECTIONS

The Fair Credit Reporting Act requires
that financial institutions report consumer credit information accurately
and fairly. However, the Consumer Data
Industry Association's rules for those
actions are too intricate and detailed for
most industry outsiders to comprehend,
Scoggins says. "Even a lot of people in
the industry don't understand them."
When a credit union sends an outstanding loan to a collection agency, any
misalignment in reporting - or even
properly performed filings - can create
the appearance that the debtor owes two
obligations instead of one.

The things that can hurt the credit unions often
come out of left field. I get the question weekly if not
daily: 'Can somebody sue us for this?' The answer is,
'Somebody can sue you for anything.'
- JOHN BREDEHOFT, MEMBER, KAUFMAN & CANOLES P.C.

14

''

THE NAFCU JOURNAL  JULY-AUGUST 2020



The NAFCU Journal July-August 2020

Table of Contents for the Digital Edition of The NAFCU Journal July-August 2020

The NAFCU Journal July-August 2020 - Cover1
The NAFCU Journal July-August 2020 - Cover2
The NAFCU Journal July-August 2020 - 1
The NAFCU Journal July-August 2020 - 2
The NAFCU Journal July-August 2020 - 3
The NAFCU Journal July-August 2020 - 4
The NAFCU Journal July-August 2020 - 5
The NAFCU Journal July-August 2020 - 6
The NAFCU Journal July-August 2020 - 7
The NAFCU Journal July-August 2020 - 8
The NAFCU Journal July-August 2020 - 9
The NAFCU Journal July-August 2020 - 10
The NAFCU Journal July-August 2020 - 11
The NAFCU Journal July-August 2020 - 12
The NAFCU Journal July-August 2020 - 13
The NAFCU Journal July-August 2020 - 14
The NAFCU Journal July-August 2020 - 15
The NAFCU Journal July-August 2020 - 16
The NAFCU Journal July-August 2020 - 17
The NAFCU Journal July-August 2020 - 18
The NAFCU Journal July-August 2020 - 19
The NAFCU Journal July-August 2020 - 20
The NAFCU Journal July-August 2020 - 21
The NAFCU Journal July-August 2020 - 22
The NAFCU Journal July-August 2020 - 23
The NAFCU Journal July-August 2020 - 24
The NAFCU Journal July-August 2020 - 25
The NAFCU Journal July-August 2020 - 26
The NAFCU Journal July-August 2020 - 27
The NAFCU Journal July-August 2020 - 28
The NAFCU Journal July-August 2020 - 29
The NAFCU Journal July-August 2020 - 30
The NAFCU Journal July-August 2020 - 31
The NAFCU Journal July-August 2020 - 32
The NAFCU Journal July-August 2020 - 33
The NAFCU Journal July-August 2020 - 34
The NAFCU Journal July-August 2020 - 35
The NAFCU Journal July-August 2020 - 36
The NAFCU Journal July-August 2020 - 37
The NAFCU Journal July-August 2020 - 38
The NAFCU Journal July-August 2020 - 39
The NAFCU Journal July-August 2020 - 40
The NAFCU Journal July-August 2020 - 41
The NAFCU Journal July-August 2020 - 42
The NAFCU Journal July-August 2020 - 43
The NAFCU Journal July-August 2020 - 44
The NAFCU Journal July-August 2020 - 45
The NAFCU Journal July-August 2020 - 46
The NAFCU Journal July-August 2020 - 47
The NAFCU Journal July-August 2020 - 48
The NAFCU Journal July-August 2020 - 49
The NAFCU Journal July-August 2020 - 50
The NAFCU Journal July-August 2020 - 51
The NAFCU Journal July-August 2020 - 52
The NAFCU Journal July-August 2020 - 53
The NAFCU Journal July-August 2020 - 54
The NAFCU Journal July-August 2020 - 55
The NAFCU Journal July-August 2020 - 56
The NAFCU Journal July-August 2020 - 57
The NAFCU Journal July-August 2020 - 58
The NAFCU Journal July-August 2020 - 59
The NAFCU Journal July-August 2020 - 60
The NAFCU Journal July-August 2020 - 61
The NAFCU Journal July-August 2020 - 62
The NAFCU Journal July-August 2020 - 63
The NAFCU Journal July-August 2020 - 64
The NAFCU Journal July-August 2020 - Cover3
The NAFCU Journal July-August 2020 - Cover4
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