A Marlborough checking-account customer is suing Liberty Bank, claiming the Middletown lender’s policy on debit overdrafts is usurious.
Mary Quirk, who is seeking class-action status in Connecticut federal court on behalf of other allegedly aggrieved Liberty depositors, claims Liberty socked her with more than $2,000 in overdraft fees on her debit-checking account in just 2018 alone.
Her suit was filed July 12, two months after Liberty, a $7 billion-asset mutual bank owned by its depositors, announced it will acquire smaller Simsbury Bank & Trust Co. for $71 million. The merger is set to close in October.
Also in March, Liberty announced a settlement of a federal mortgage-discrimination lawsuit brought last October on behalf of Hartford area minority and low-income residents whom housing advocates claimed Liberty had been “redlined’’ and denied access to home loans.
Quirk’s suit claims that Liberty adheres to its policy of dinging customers’ accounts with a $33 overdraft fee even when depositors have enough in their “available balances’’ in their accounts to cover the debit.
In her 19-page lawsuit, Quirk described how Liberty’s transaction-settlement process is supposed to work: Once debit transactions are cleared on an account with sufficient funds, Liberty immediately reduces depositors’ checking accounts for the sum, sets aside, or places “holds’’ on funds to cover the amounts, and flags the account with an “available balance’’ to show the subtracted amount.
“As a result,’’ the suit states, “customers’ accounts will always have sufficient available funds to cover these transactions because Liberty has already sequestered these funds for payment.’’
But multiple debits and deposits on a checking account can cause customers’ account balances to fluctuate, sometimes with accounts momentarily showing a “negative balance’’ before debit transactions can be fully settled.
When that happens, Quirk claims, Liberty imposes the debit overdraft fee regardless of whether the account ultimately held enough funds to cover the transaction.
Lawyers for Quirk declined comment.
In a statement, Liberty CEO David W. Glidden said that the bank does not comment on pending litigation, adding that it “takes this and all allegations very seriously and we are dedicated to treating our customers with the utmost respect.”
