An N.C. Business Court judge recently approved an undisclosed financial settlement of a consumer complaint over how Allegacy Federal Credit Union overdraft fees were assessed in 2020.
Plaintiff Terri Moose sued in 2020 for breach of contract, unjust enrichment and unfair and deceptive trade practices under state law.
Moose’s complaint focuses on her objections to how Allegacy was assessing overdraft fees on debit-card transactions in 2020.
According to the complaint, Moose experienced less than a combined $150 from four overdraft fees “that Allegacy supposedly should not have charged Moose.”
Allegacy and Moose reached agreement in August.
However, Judge Adam Conrad questioned the motivation behind the settlement, in particular “about potential abuse of the class-action mechanism,” and declined to approve without additional information from the parties.
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Conrad wrote that “there are too many red flags to ignore,” citing the proposed settlement amount and that more than 95% would go to Moose’s counsel.
After the parties submitted the requested additional information, Conrad held a hearing where the parties agreed to revise their agreement.
Conrad approved of the revision. Moose’s individual claims were dismissed with prejudice, meaning they are not eligible to be re-filed, while the putative class claims were dismissed without prejudice, meaning they can be re-filed.
“We appreciate Judge Conrad’s careful consideration of this matter to ensure that all parties’ rights were protected,” said Tim Moore, Allegacy’s general counsel and chief risk officer. “We have consistently denied the plaintiff’s allegations and underscore there was no finding of any liability or fault on Allegacy’s part.
“With that being said, we are also pleased to have this matter concluded so Allegacy can focus more on the future.”
The complaint referred to the overdraft fees policy as “authorize positive, settle negative.”
The U.S. Office of the Comptroller of the Currency defines the overdraft fee structure as “assessing overdraft fees on debit card transactions that are authorized when a consumer’s available account balance is positive, but later post to the account when the available balance is negative.”
According to the proposed settlement, Allegacy discontinued the practice in May 2020.
Conrad that Moose’s counsel “must report and substantiate their billing rates, the time they spent on this litigation, and any other costs and expenses.”
“Moose’s counsel must also: identify by case name, number and county all class actions that they have brought in North Carolina relating to APSN transactions; whether each case is pending or has been resolved; and for any case that has been resolved, whether the resolution took the form of an individual or class-wide settlement.”