Redstone Credit Union Settles $3.7 Million Overdraft Class Action Lawsuit
Payments are expected to be made to members and former members who were charged OD and NSF fees from 2015 to 2021.
A preliminary agreement is expected to be approved by a federal judge in October for a $3.7 million overdraft fee class action lawsuit settlement with Alabama’s largest credit union.
The $7.6 billion Redstone Federal Credit Union (RFCU) in Huntsville agreed to settle the lawsuit earlier this year that allegedly claimed members were wrongfully charged overdraft and non-sufficient funds (NSF) fees from 2014 to 2021, according to court filings in the U.S. District Court in Huntsville.
The lawsuit alleged that RFCU violated its own account agreement by charging members overdraft (OD) fees based on available balances instead of actual balances. Additionally, the credit union allegedly charged multiple overdraft and NSF fees on transactions that were previously rejected, according to the lawsuit.
RFCU said it agreed to the proposed settlement to avoid the burden of risk, expense and disruption of its business operations associated with further litigation.
The credit union also said it does not in any way acknowledge, admit or concede to the allegations made in the lawsuit, and disclaims and denies any fault or liability, or any charges of wrongdoing that have been or could have been asserted in the lawsuit, court filings showed.
RFCU members are expected to receive a monetary payment based on the amount they were charged in OD and NSF fees, under the terms of the proposed settlement. Current members are expected to receive credit on their account and former members are expected to receive a check payment.
The approximate number of members and former members that are expected to receive a credit or check payment was not disclosed in court documents.
Subject to the court’s approval, the plaintiffs of the lawsuit – Tamela Hampton, Beverly Macon and Savannah Garner – may each receive a “service award” of $10,000. In addition, attorneys Jeffrey D. Kaliel and Sophia Goren Gold of Washington, D.C. will receive 33.3% or $1,232,100 of the $3.7 million settlement, plus “reasonable litigation costs,” according to the proposed settlement.