Trending (Part I): Account Fees, EFTA and FCRA Litigation

On the heels of the recent ACU Attorneys Conference, I am excited to be able to bring back some legal insights to share with our Michigan credit union industry! This week we will explore Part I of litigation trends with a discussion of what we are seeing related to account fees, EFTA, and FCRA. So, buckle up and let’s get right to it! 

What are the Trends? 

Account Fees: Challenges continue against account fees — including returned check and APSN/NSF fees — with plaintiffs’ attorneys using CFPB guidance to pursue claims under state laws, most often through UDAAP theories. The CFPB’s guidance remains in effect despite the agency’s ongoing leadership uncertainty and efforts to scale back its workforce to only those positions required by statute. However, preemption arguments may be regaining traction. In King v. Navy Federal Credit Union, the plaintiff alleged that a $15 returned check fee violated California’s Unfair Competition Law as an “unlawful” and “unfair business” practice. The Ninth Circuit held that 12 C.F.R. §701.35 preempts state laws regulating account fees for federal credit unions. 

Electronic Funds Transfer Act (EFTA): Class action lawsuits challenging the use of the Model Form A-9 continue to surface. While this isn’t a new development, it’s one we should continue to monitor closely. Courts remain divided on the issue — some holding that the Model Form A-9 alone is sufficient, while others finding that the form must include additional language to comply. We’re also seeing more individual cases involving disputes over the error resolution process, particularly when members claim “unauthorized” charges. The rise in fraud allegations has led to an uptick in Reg E and EFTA-related claims, and since fraud shows no signs of slowing down, staying current on these cases will be increasingly important. 

Fair Credit Reporting Act (FCRA): There’s also been an uptick in FCRA and debt collection cases. In May, the Second Circuit ruled in Suluki v. Credit One Bank, where the plaintiff alleged that the bank violated the FCRA by failing to conduct a reasonable investigation into her dispute. The court affirmed the District Court’s decision, finding that Credit One Bank had conducted a reasonable investigation based on the information available. The key takeaway from this case is that financial institutions are required to perform a “reasonable” investigation—not a flawless one—and the outcome doesn’t have to favor the member who filed the dispute. It simply must meet the standard of reasonableness under the circumstances. 

To sum it up… 

Litigation will always be part of our landscape, which makes it essential to stay informed about cases being brought against financial institutions nationwide. Awareness is our first line of defense — it gives us the insight to evaluate, adapt, and mitigate risk before a lawsuit ever reaches our door. 

As always, this article is intended for general information only and does not constitute legal advice. If you have any questions about this topic and/or possible implications, you should contact your attorney for advice.  

Hope to see you next time when we take a second to dig into Part II of litigation trends!  

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