The lawsuit charged AFCU with alleged Authorize Positive, Settle Negative (APSN) fee and Regulation E violations under the Electronic Fund Transfer Act.​

An APSN violation occurs when a financial institution charges an overdraft fee on a debit card transaction that was authorized when an account had sufficient funds but later settled when the account balance was insufficient. This situation arises because of the time gap between the authorization and settlement of transactions, during which other transactions may affect the account balance. A Regulation E violation occurs when a financial institution improperly assesses an overdraft fee for debit card payments and ATM withdrawals or transfers.​

The AFCU class action lawsuit covers APSN and Regulation E overdraft fees that were charged to current and former members' debit card payments approved from January 2021 to March 2024.​

While AFCU disputes the lawsuit's allegations and denies any liability or wrongdoing, the credit union agreed to the preliminary settlement to avoid further expense, inconvenience and distraction of additional litigation.​

The credit union has agreed to pay $2.5 million in cash to be deposited into the settlement fund. In addition, the credit union has agreed to forgive approximately $35,530 in APSN fees that had been assessed but never paid.​

The proposed settlement would also pay a $15,000 service award to McAllister and Virginia is for Movers LLC.​

The lawyers representing McAllister and Virginia is for Movers LLC would be paid $845,176 in fees and $65,655 in litigation expenses, according to the preliminary settlement agreement. The attorneys are Lynn A. Troops, Vess A. Miller and Lisa M. LaFornara of Cohen & Malad, LLP; J. Gerard Stranch IV of Stranch, Jennings & Garvey, PLLC; and Devon J. Munro of Munro Byrd, P.C.​

The balance of the settlement fund, after attorneys' fees and costs, the service award, and the settlement administrator's fees are paid, will be divided among current and former AFCU members in accordance with the formulas outlined in the settlement agreement. Current credit union members will receive a credit to their accounts for the amount they are entitled to receive without having to take any action. Former AFCU members will receive a check from the settlement administrator without having to take any action.​

READ MORE: Apple Federal Credit Union Overdraft Settlement Agreement.

Contact Peter Strozniak at [email protected]