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Nov 26: Vancity to refund fees to members

Vancity to refund fees to members

Vancouver, November 26, 2004 - Vancity Credit Union will refund some fees to members and former members as a result of the recent settlement of a class action lawsuit.

For many years, Vancity had an overdraft administration fee of $10, charged when a member draws on an account that doesn’t have sufficient funds in it to cover the transaction. For example, the fee is charged when Vancity makes a decision to honour a cheque for a member who has insufficient funds in their account so that the cheque doesn’t get returned.

“While we charge for this service, it is much less than the additional charges our member could face from us, and the merchant, if the cheque were bounced, “ said Vancity CEO Dave Mowat. “When that happens—and it’s happened to many of us—the cost to our member is much more in time, money and frustration.”

A class action lawsuit arose as a result of this fee. The issue raised in the suit was whether a portion of the overdraft administration fee could be considered as interest, which, in certain circumstances, would contravene the law.

“We have always viewed this overdraft administration fee as a service charge, not as interest,” said Mowat. “This is a pretty grey area of the law and both the plaintiff and Vancity had very good arguments about this issue.

“To that end, we reached a settlement that we felt is a fair compromise and the right thing for us to do. As a result, some of our members are entitled to a refund of a portion of fees that they have paid.

“While many companies make it as hard as they can for their customers to make a claim, in true Vancity fashion, we are going to make it as easy as possible for members and former members to receive a refund, and even donate it to the Vancity Community Foundation should they wish,” added Mowat.

Vancity has created a pool of $2.8 million for this settlement. That sum will pay any claims by members or former members, the administration costs of the claims process, and the plaintiff's lawyers' fees, which are determined by the Court. Any funds that remain in the pool will be donated to the Vancity Community Foundation.

The class involved in this case is defined as all persons residing in British Columbia who are or were members of Vancity and who were charged one or more overdraft administration fees exceeding $5 at any time on or after February 5, 1997, and who have not previously received a refund of those fees. This settlement does not affect any claim for overdraft fees paid prior to February 5, 1997.

A dedicated Refund Call Centre has been set up to field questions and register claims from current and former members at 604-709-6958 or toll-free at 1-866-899-6958.

Vancity is Canada’s largest credit union, with $10.5 billion in assets, more than 300,000 members, and 42 branches throughout Greater Vancouver, the Fraser Valley and Victoria. Vancity owns Citizens Bank of Canada, serving members across the country by telephone, ATM, and the Internet. Both Vancity and Citizens Bank are guided by a commitment to corporate social responsibility, and to improve the quality of life in the communities where we live and work.