I once was a member of the Desert Schools Federal Credit Union. Under the terms & conditions of the accounts I originally opened (in accordance with my overdraft protection credit line), if I attempted to withdraw amounts from an ATM in excess of the balances in the pertinent account at that time - the credit union instantly originated a loan in my name.
If I tried to withdraw money from one account (e.G. Savings) which did not have enough in it, the fact that a different account (e.G. Checking) might have had enough to cover it did not matter. Not surprisingly, this fact was not disclosed to me when I opened my savings, checking accounts.
Fast forward several years later. I attempt to withdraw $20 at an ATM from my savings account, which only has a balance of roughly $10. At that same time, my checking account has roughly a $60 balance. Having insufficient funds in the savings account, the credit union enacts a loan for $50 and instantly deposits that full amount in my savings. The ATM dispenses me the requested $20 and I am on my way.
Once I become aware of this "loan", I went to the credit union to gain clarification on how they chose $50 as the amount of such a "loan". Specifically, I wanted to know why $50, as opposed to $10, $20, $30, or some other amount.
First, I was badgered excessively for overdrafting my savings account. I do not deny I overdrafted the account; it was my error, plain and simple. They finally allowed me to get to my original question - how did they choose the amount of the "loan" they enacted in my name (which was reportable to the credit bureaus)?
The assistant branch manager, whom we'll call Mike, said it was all laid out in the terms & conditions of the overdraft protection documents I originally signed. Upon examination, we found a line that states they could levy "loans" like for for "up to $100." Again, I reiterated my initial inquiry, how did they come up with $50 in my case?
Mike then put in calls to the credit assistance departments, who did not have an answer, claiming it is laid out all in the terms & conditions for members. So, next we went to the general terms & conditions for savings and checking accounts. Not suprisingly, there was nothing mentioned in there about any system or table for determining the amount enacted for such a "loan".
At this point, I informed Mike that I believed the credit union might be in violation of several of the federal fair lending and credit union statutes, given that they loaned me money at rates for which they had never legally disclosed how they came up with the amounts. Mike told me that he would have to refer this question to higher credit union authorities for further answers. I closed all my accounts that day, but Mike insisted that he would still work to get an answer from the credit union.
Two weeks later, Mike called and told me the credit union was going to mail me their answer.
I never heard back. As far as I am concerned, the actions of the credit union are a rip-off because they never legally disclosed to me, or any other similar members, any enumeration of how they determine how much these types of "loans" would be. Without legal disclosure of such a schedule, the loan amount appears arbitrary and capricious, and violative of federal lending laws...
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