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No Actionable Violations by Bank Re: Overdraft Charges/Overdraft Charges Are Not Interest

The First Department determined plaintiff had not stated causes of action against a bank based in part upon alleged violations of statements in a checking-account brochure issued by the bank.  The complaint challenged the method used by the bank to impose overdraft charges on plaintiff’s checking account, alleging breach of contract, violations of General Business Law 349 and usury.  With respect to the General Business Law and usuary causes of action, the court wrote:

To state a claim under General Business Law § 349, “a plaintiff must allege that the defendant has engaged in an act or practice that is deceptive or misleading in a material way and that plaintiff has been injured by reason thereof” … . A ” deceptive act or practice'” is defined as “a representation or omission likely to mislead a reasonable consumer acting reasonably under the circumstances'” … * * *  Plaintiff makes no claim that the applicability of his overdraft protection was not disclosed to him. * * *

The third cause of action, alleging usury, was properly dismissed because, as found by the motion court, overdraft charges are not interest. “If an instrument provides that the creditor will receive additional payment in the event of a contingency beyond the borrower’s control, the contingent payment constitutes interest within the meaning of the usury statutes” … . Even assuming a debtor-creditor relationship between the parties, the contingency of an account overdraft would have been within plaintiff’s control … . Feld v Apple Bank for Sav, 2014 NY Slip Op 02662, 1st Dept 4-17-14

 

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