Federal appeals court rules overdraft fee definitions must be unambiguous News
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Federal appeals court rules overdraft fee definitions must be unambiguous

The US Court of Appeals for the Eleventh Circuit held Tuesday that under the Federal Reserve’s Regulation E, which implemented the Electronic Fund Transfer Act, a financial institution must clearly define the procedures used for overdraft fees.

The case, Tims v. LGE Community Credit Union (LGE), centered on two $30 overdraft fees that LGE charged Tims. Tims argued that, at the time the overdraft fees were assessed, she had enough funds in her ledger balance to cover her transactions. LGE countered that the contracts unambiguously stated that the credit union would use available balance to determine account overdrafts. The district court dismissed Tims’ claim under FRCP 12(b)(6) and determined that the contracts allowed LGE to use available balance to calculate overdraft fees. The Eleventh Circuit reversed.

We disagree with the district court’s interpretation of the contracts. Because we conclude that the agreements are ambiguous as to whether LGE could rely on an account’s available balance, rather than its ledger balance, to assess overdraft fees, we reverse the district court’s dismissal of the case and remand for further proceedings consistent with our opinion.

The case will now be remanded for further proceedings.