Judge allows lawsuit on Granite State Credit Union overdraft fees to move forward

Mark Hayward, The New Hampshire Union Leader, Manchester
·3 min read

Nov. 12—CONCORD — A court challenge to the $30 overdraft fee charged by Granite State Credit Union can move forward, a federal judge ruled this week.

In a 10-page order, U.S. District Court Judge Landya McCafferty, the chief district court judge in the New Hampshire, rejected efforts by the Manchester-based credit union to throw out the lawsuit.

The order is the first substantial ruling for a case still in its infancy. The lawsuit was filed in June, and lawyers are seeking class-action certification. The case will involve a lengthy period that involves exchanges of information and depositions before the case ever gets to trial.

Both sides have hired national law firms to represent them. Attorneys for both the credit union and the plaintiffs, who are only identified as Rita and Edwin Grenier of New Hampshire, did not respond to a reporter's efforts for comment.

Granite State Credit Union has eight branch locations in New Hampshire, counts 46,000 members and employs 149 people, according to the National Credit Union Service Organization.

It has $531 million in assets, according to the lawsuit.

In their lawsuit, the Greniers say the credit union charges a $30 fee when the bank covers an overdrawn item. The fee is per overdraft and there is no limit on how many fees are charged per day.

"The overdraft fee is a punitive fee, rather than a service fee, which makes it even more unfair because most account overdrafts are accidental and involve a small amount of money in relation to the fee," the suit reads.

In her 10-page order, McCafferty notes that customers of 10 financial institutions across the country have filed similar suits.

The Grenier lawsuit faults GSCU for not specifying what triggers an overdraft.

In an opt-in disclosure provided to all members, GSCU tells members it charges the fee "when you do not have enough money in your account."

Federal law requires credit unions to use specific language in a single document. The lawsuit said the GSCU disclosure should specify what balance triggers an overdraft. Two options are available — the actual balance, which reflects money in the account at the time of the check or withdrawal; or the available balance, which reflects the actual balance less any holds and pending debits.

"Issues occur," McCafferty wrote, "when a disclosure does not adequately convey how overdraft fees are assessed."

GSCU lawyers had maintained that the credit union disclosed the use of the actual balance in its five-page membership agreement. But McCafferty said that federal regulations make it clear that the disclosure must be in a stand-alone document.

The lawyers bringing the case plan to move for class certification by the end of February 2022. With class certification, the lawyers would seek out GSCU members who have had to pay the overdraft fees.

Credit union lawyers have until May 2022 to bring another challenge based on the law, called summary judgement.

The Grenier lawyers are seeking compensatory damages, return of all overdraft fees with interest, statutory damages, attorney fees, and an order forbidding wrongful overdraft fees.