Desert Financial Credit Union Overdraft Protection Program Ruled Unenforceable Due to Lack of Standing

Strategic Insights -

The United States District Court for the District of Arizona has issued an order dismissing a putative class action lawsuit against Desert Financial Credit Union, finding that the plaintiff, Eva Cornell, lacks standing due to her failure to demonstrate any injury or adverse effects from the alleged deceptive opt-in form related to the credit union's overdraft protection program.

Key Takeaways:

  • The Court found that the plaintiff, Eva Cornell, does not have standing because she did not allege that she read the allegedly confusing form before choosing to opt into Desert Financial's overdraft protection program.
  • The plaintiff's alleged injury, an asserted informational injury, cannot satisfy Article III of the US Constitution.
  • The Supreme Court's decision in TransUnion LLC v. Ramirez (2021) supports the Court's finding that the plaintiff lacks standing.
  • The Court's determination that the plaintiff lacks standing makes it unnecessary to resolve Desert Financial's alternative Rule 12(b)(6) dismissal arguments.
  • The plaintiff's understanding of the overdraft fees did not occur until 2020, after she met with her attorney.
  • The credit union's overdraft protection program uses available balance, rather than ledger balance, to assess overdraft fees.
  • The plaintiff was assessed a single overdraft fee of $35 on May 20, 2020, after eight of the nine previously assessed fees were reversed.
  • The case involves Regulation E, a regulation promulgated by the Consumer Financial Protection Bureau (CFPB), and the Arizona Consumer Fraud Act (ACFA).

Statistics:

  • 9 overdraft fees of $35 each were assessed to the plaintiff between May 14-20, 2020.
  • 8 of the 9 overdraft fees were reversed on May 20, 2020, leaving only a single $35 fee.
  • 1 single $35 fee was paid by the plaintiff on May 20, 2020, after the reversal of the previous fees.
  • The plaintiff's case was delayed due to arbitration-related litigation, including a trip to the Arizona Supreme Court and the Ninth Circuit.

Sources:

  • IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA Eva Cornell, Plaintiff, v. Desert Financial Credit Union, et al., Defendants. No. CV-21-00835-PHX-DWL
  • TransUnion LLC v. Ramirez, 594 U.S. 413, 422 (2021)
  • Regulation E, promulgated by the Consumer Financial Protection Bureau (CFPB)
  • Arizona Consumer Fraud Act (ACFA)