Apple Federal Credit Union resolves overdraft class action lawsuit for $2.5 million
Apple Federal Credit Union has recently settled an overdraft class action lawsuit for a substantial amount. The $4.6 billion credit union based in Fairfax, Virginia, has agreed to pay more than $2.5 million to settle the case, which was initiated by Abigail McAllister and Virginia is for Movers LLC, a family-owned moving business.
The lawsuit accused Apple Federal Credit Union of alleged Authorize Positive, Settle Negative (APSN) fee and Regulation E violations under the Electronic Fund Transfer Act. An APSN violation occurs when a financial institution charges an overdraft fee on a debit card transaction that was authorized with sufficient funds but settled when the account had insufficient funds. Regulation E violations occur when overdraft fees are improperly assessed for debit card payments and ATM withdrawals or transfers.
The class action lawsuit covers APSN and Regulation E overdraft fees charged to members’ debit card payments from January 2021 to March 2024. Though Apple Federal Credit Union disputes the allegations and denies wrongdoing, they agreed to the settlement to avoid further litigation expenses and distractions.
As part of the settlement, Apple Federal Credit Union will pay $2.5 million in cash to be deposited into the settlement fund and will forgive approximately $35,530 in previously assessed APSN fees. In addition, a $15,000 service award will be granted to McAllister and Virginia is for Movers LLC.
Legal fees and expenses for McAllister’s attorneys will amount to $845,176 and $65,655 respectively. The settlement fund, after deducting attorneys’ fees, costs, and service awards, will be distributed among current and former members according to outlined formulas. Current members will receive a credit to their accounts, while former members will receive a check without needing to take any action.
The final approval hearing for the settlement is scheduled for June 17, and the settlement agreement outlines the details of the distribution process. This resolution highlights the importance of addressing overdraft fee practices and upholding regulatory compliance in financial institutions to protect the interests of consumers.
