OCEANFIRST BANK SLAMMED WITH CLASS ACTION SUIT ALLEGING ILLEGAL OVERDRAFT FEES

OceanFirst Bank, which is headquartered in Ocean County and has multiple locations in Jackson and Toms River, has just been slammed with a class action lawsuit alleging their overdraft fees are unlawful.

The lawsuit was filed by Stephanie Kuhner on behalf of herself and all others similarly situated.

According to the complaint filed in New Jersey Superior Court in Ocean County by Miami Attorney Leanna Loginov and Berkeley, CA Attorney Sophia Goren Gold Esq.:

The bank unlawfully maximizes its already profitable fees through the deceptive and contractually-prohibited practice of charging multiple insufficient funds fees (NSF) fees, or an NSF fee followed by an overdraft fee, on an item. Unbeknownst to consumers, when the bank reprocesses an electronic payment item, ACH item, or check for payment after it was initially rejected for insufficient funds, the bank chooses to treat it as a new and unique item that is subject to yet another fee. The bank's contract never states that this counterintuitive and deceptive result could be possible and, in fact, promises the opposite. The bank's contract promises that one fee will be assessed on an item, and this term must mean all iterations of the same instruction for payment. As such, the bank breached the contract when it charged more than one fee per item.

The same item on an account cannot conceivably become a new one when it is rejected for payment then reprocessed, especially when - as here - Plaintiff took no action to resubmit it. Even if the bank reprocesses an instruction for payment, it is still the same “item.” Its reprocessing is simply another attempt to effectuate an account holder’s original order or instruction. 

Moreover, customers reasonably understand that the bank's reprocessing of checks, electronic payment items, and ACH items are simply additional attempts to complete the original order or instruction for payment, and as such, will not trigger fees. In other words, it is always the same item.

Overdraft fees and NSF fees are among the primary fee generators for banks. According to a banking industry market research company, Moebs Services, in 2018 alone, banks generated an estimated $34.5 billion from overdraft fees. Unfortunately, the customers who are assessed these fees are the most vulnerable customers. Younger, lower-income, and non-white account holders are among those who were more likely to be assessed overdraft fees. Through the imposition of these fees, the bank has made substantial revenue to the tune of tens of millions of dollars, seeking to turn its customers’ financial struggles into revenue.

The Federal Deposit Insurance Corporation has expressed concern with the practice of assessing multiple fees on an item. Additionally, in the latest issue of the CFPB’s Supervisory Highlight, the Bureau scrutinized junk fees, including the practice of charging multiple NSF fees.

This abusive practice is not universal in the financial services industry. Indeed, major banks like Chase —the largest consumer bank in the country — do not undertake the practice of charging more than one fee on the same item when it is reprocessed. Instead, Chase charges one fee even if an item is reprocessed for payment multiple times.

The lawsuit alleges one cause of action: Breach of Contract and Breach of the Covenant of Good Faith and Fair Dealing.

The complaint - which demands a trial by jury - seeks judgment as follows:

a. Certifying this case as a class action, designating Plaintiff as class representative and designating their attorneys as Class Counsel;

b. Award Plaintiff and the Class actual damages in amount according to proof;

c. Award Plaintiff and the Class restitution in an amount to be proven at trial;

d. Award Plaintiff and the Class pre-judgment interest in the amount permitted by law;

e. Award Plaintiff and the Class attorneys’ fees and costs as permitted by law;

f. Declaring the bank's practices outlined herein to be unlawful and a breach of contract;

g. Enjoining the bank from engaging in the practices outlined herein; 

h. Granting Plaintiff and the Class a trial by jury;

i. Granting leave to amend these pleadings to conform to evidence produced at trial; and 

j. Granting such other relief as the Court deems just and proper.

Back in September 2024, OceanFirst Bank agreed to pay over $15 million to resolve a lawsuit filed by the Justice Department’s Civil Rights Division, U.S. Attorney’s Office for the District of New Jersey and Department of Housing and Urban Development (HUD) to resolve allegations that it engaged in a pattern or practice of lending discrimination by redlining predominantly Black, Hispanic and Asian neighborhoods in Middlesex, Monmouth, and Ocean Counties in New Jersey. Redlining is an illegal practice in which lenders avoid providing credit services to individuals living in communities of color because of the race, color or national origin of residents in those communities.

Specifically, the complaint alleges that OceanFirst disproportionately focused its outreach and advertising on majority-white communities, placed its branches in majority-white neighborhoods, and closed its only branches in the majority-Black, Hispanic, and Asian neighborhoods in those counties.

The bank has not yet responded to the new allegations.

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