SAN FRANCISCO – A federal court yesterday dismissed separate overdraft suits brought against SchoolsFirst FCU and Kern Schools FCU, two of the nine credit union challenged over their overdraft practices in recent months.

The two suits were dismissed after the plaintiffs, both represented by the same San Jose law firm, neglected to serve the two credit unions an official complaint, both of which had been filed with the U.S. District Court for the Northern District of California in late June.

The termination of the two suits follows the dismissal of a similar action brought in April against Xceed Financial FCU after the El Segundo, Calif., credit union argued the member complaint should be arbitrated and not litigated under the terms of a comprehensive membership agreement signed by the member.

Each of the suits claimed the credit union engaged in unfair business practices by reordering debit transactions, with credit unions paying off debits from largest to smallest, instead of by date, in order to create more overdrafts and the fees that come with them. Similar suits against a variety of banks have resulted in numerous banks paying multi-million dollar settlements.

Overdraft suits are still pending in federal court against Educational Employees CU, Star One CU, Alliant CU, Alabama Telco CU, America’s First FCU and Legacy Community FCU.


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