Member Sues California Credit Union Over Return Deposit Item Fee

On Sept. 30, 2022, Brandon Gray, a member of the $3.5 billion Credit Union of Southern California in Anaheim, Calif., deposited a check from a third-party into his account. A few days later he was shocked to learn that the credit union charged him with a $10 return deposit item fee because the check bounced.

In his class action lawsuit filed in Orange County Superior Court last month, Gray alleged the return deposit item fee violates California’s Consumer Legal Remedies Act and the state’s Unfair Competition law.

“By charging Return Deposit Item Fees, CU SoCal unfairly targeted its members with financial penalties for faulty checks that the members had no hand in issuing,” according to the lawsuit. “Plaintiff (Gray) was shocked when he was charged these fees because he did nothing wrong yet was penalized by CU SoCal. There was nothing Plaintiff could do to avoid — or even anticipate — a Return Deposit Item Fee assessed by CU SoCal at the time the deposit was made. By charging its customers significant fees in situations where the customers did nothing wrong and could not have avoided the fee through reasonable diligence, CU SoCal acted in a manner that is unfair, oppressive and against public policy.”

A spokesperson for CU SoCal could not comment on the lawsuit’s specific allegations but noted the credit union’s fee policies and disclosures comply with all regulations and laws.

“We very recently received the suit and are reviewing the allegations with counsel, so we cannot comment on the specific allegations. However, I can say that we take our responsibility to protect the interests and assets of all our member-owners very seriously,” CU So Cal Chief Communication and Experience Officer Michelle Hunter said. “We regularly review our fee schedule to ensure they are fair and equitable for all members. We also believe that our fee policies and disclosures are in compliance with all laws and regulations. Consistent with our member-first philosophy that guides every decision we make, we’ll respond to this legal action in a way that best serves the interests of our members.”

CU SoCal realized more than $12 million in fees and charges at the end of 2022, according to the lawsuit.

Gray’s lawsuit alleged the credit union’s return deposit item fee violates the state’s laws because it unfairly charged the fee irrespective of the facts and circumstances of the member and the fee was deceptive because the credit union’s deposit agreement allegedly failed to adequately disclose the credit union’s practice of charging the fee.

The lawsuit also alleged the return deposit item fee also violates the state’s unfair competition law because it charges members “junk fees” that provide no tangible service or benefit to them.

READ MORE: Brandon Gray v. Credit Union of Southern California class action lawsuit.