Risk alert: Improperly charging ACH transfer fees can lead to litigation

In light of a class action lawsuit filed against Bank of America on behalf of customers who were assessed improper fees for ACH transfers, a new CUNA Mutual Group risk alert reminds credit unions that improperly charging fees for ACH transfers could lead to litigation.

Unlike overdraft/NSF fee lawsuits, the Bank of America case does not allege that the financial institution failed to disclose the fees, or how and when the fees are assed, the risk alert explains. It alleges that Bank of America should have disclosed cheaper options for initiating ACH credit transfers through online banking. By failing to disclose these options, the complaint alleges that Bank of America was engaged in unfair or deceptive practices.

Further, the complaint alleges that charging fees for ACH credit transfers is deceptive because accountholders could simply instruct payees to take the funds from their Bank of America accounts for no fee. The suit claims that accountholders are being deceived into believing such fees are a fundamental part of moving money via the ACH system.

The risk alert states that credit unions should take notice and review disclosures and postings on websites promoting this service as well as fee schedules to address this potential risk. Mitigation tips to consider include:

  • ensure your fee schedule and online banking disclosure clearly state the circumstances when ACH fees are charged;
  • consider disclosing that members may avoid a fee by allowing payees to pull funds (ACH Debit) from the member’s account; and
  • work with your document provider to update disclosures and fee schedules.

In addition, the risk alert urges that, whether or not your credit union charges a fee for ACH transfers, credit unions should consider adding binding arbitration language with a class action waiver to your member account agreement.

CUNA Mutual Group’s risk alerts, in additional to additional risk-prevention resources, may be accessed on their Protection Resource Center. Log-in is required.

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