Capital One Bank has received a class action lawsuit for allegedly violating federal consumer protection laws. The plaintiffs accuse the bank of committing a breach of contract by unlawfully charging customers overdraft protection fees (please note this lawsuit does not have anything to do with the getmyoffer.capitalone credit card promotion).
Plaintiff Chris Lashambae of New York argues that Capital One charged overdraft fees to his account after he used his debit card to pay the ride share company, Lyft. The rides, which occurred in April, May, and June of 2017, were each one-time transactions made after using the company’s service.
Lashambae claims Capital One violated the terms of their own policy by charging an overdraft fee for a one-time transaction. The bank’s terms stipulate that customers will only be charged overdraft fees for recurring payments, or charges that occur on a regular basis. He believes the bank should have known that his Lyft rides were not a recurring transaction. Furthermore, he claims the charges violated a federal law because he never enrolled in the bank’s overdraft protection plan. Without his consent, he argues, it is illegal for Capital One to charge him the $35 insufficient funds fee.
Charging overdraft fees is common practice for many banks. The policy, which is a type of small loan, charges a fee for customers to temporarily spend more money than they have in their bank account. The protection is meant to save the customer from the embarrassing experience of having their card declined in public.
Some insufficient funds policies, including Capital One’s, have come under scrutiny recently. Allegations of abusive charges led Congress to pass a federal protection law in August 2010. The law prohibited banks and credit unions from automatically enrolling customers in their insufficient fund protection program. Instead, banks and credit unions were required to receive consent from customers before they could charge an overdraft fee which allowed customers the opportunity to opt out of the coverage.
This is not the first time Capital One has been sued for their overdraft policies. A lawsuit filed in 2010 accused the company of processing transactions in an order that would maximize their revenue. The bank allegedly completed the payments in order of dollar amount, rather than in chronological order, which drained customers’ accounts more quickly and allowed the bank to charge more overdraft fees. The alleged unlawful practices dated as far back as 2002. After making multiple attempts to have the suit dismissed, Capital One eventually settled for $31 million. The company denied the accusations but chose settlement to avoid the costs of lengthy litigation.
Lashambae filed the suit on November 3 in the Brooklyn office of the New York Eastern District Court. He is seeking compensation for the unlawful fees on behalf of himself and all other Capital One customers who have been similarly affected by the bank’s policies. The lawsuit is Chris Lashambae v. Capital One Bank, Case No. 1:17-cv-06406-FB-VMS, in the U.S. District Court for the Eastern District of New York.