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Class action lawsuit targets Philadelphia Federal Credit Union

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Philadelphia Federal Credit Union has been sued over the fees it charges members for insufficient funds.

Aliesha Dailey, the lead plaintiff in the class action lawsuit, alleged that the $1.1 billion-asset credit union charged her two fees for the same item, according to the complaint.

Dailey attempted an Automated Clearing House transaction from her savings account on Feb. 6, according to the complaint, which was filed last week. The credit union declined payment on the item as Dailey’s account had insufficient funds to cover the amount. At that time, Philadelphia FCU charged Dailey a $28 NSF fee.

“Plaintiff does not dispute this initial fee, as it is allowed by PFCU’s account documents,” the complaint states.

On Feb. 7, the credit union allegedly processed the item a second time. In this instance, the item was paid, though there were still insufficient funds, and Dailey was charged a $28 overdraft fee, according to the lawsuit.

“In sum, PFCU charged Plaintiff $56 in NSF Fees to attempt to process a single payment,” the complaint says.

Philadelphia FCU did not immediately respond to a request for comment.

The plaintiff didn’t dispute PFCU’s right to either reject a transaction and charge a single NSF fee, or pay a transaction and charge a single overdraft fee if that transaction overdraws the account. However, the complaint asserts that “PFCU unlawfully maximizes its already profitable account fees with deceptive practices that also violate its contract” by assessing multiple NSF fees on what the plaintiff argues is a “single” ACH transaction.

“In PFCU’s sole and undisclosed view, each time PFCU processes an ACH transaction or check for payment after a having been rejected for insufficient funds, it becomes a new, unique item or transaction that is subject to another NSF Fee. But PFCU’s Account Documents never even hints that this counterintuitive result could be possible,” the complaint argues.

The complaint goes on to state that the credit union’s account documents “indicate that only a single NSF fee will be charged for however many times the request for payment is reprocessed. An electronic item reprocessed after an initial return for insufficient funds cannot and does not fairly become a new, unique item for NSF fee assessment purposes.”

The lawsuit alleges breach of contract and breach of duty of good faith and fair dealing and seeks monetary damages, restitution and declaratory relief from the credit union.

A number of credit unions have faced complaints over how they handle members not having sufficient funds to cover a transaction. Several credit unions, such as United Federal Credit Union and VyStar Credit Union, have been sued and eventually settled cases regarding their overdraft practices.

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