Los Angeles woman files class action against Citibank, alleges 'junk fee'

Lawsuit contends fees on returned checks unlawful

Photo by Money Knack on Unsplash

A California woman has filed suit in South Dakota against Citibank, alleging the company’s practice of charging “junk fees” on returned checks violates consumer finance protections.

Vivian Khuu of Los Angeles is seeking a class-action lawsuit against the banking giant, which is headquartered in Sioux Falls. The class of plaintiffs proposed in the lawsuit would include all people nationally who had an account with Citibank and were charged a similar fee. The suit is seeking to define a sub-class of plaintiffs who reside in California who, like Khuu, were Citibank customers and charged a similar fee, alleging Citibank’s practice violates the California Consumer Legal Remedies Act.

The fee in question, called a deposited check returned unpaid fee, is levied on customers when they deposit checks into their accounts, but the checks cannot be processed.

“In other words,” the lawsuit says, “when Person A writes a check to Person B and the check bounces or is returned unpaid, the bank charges Person B a fee even though Person B had no reasonable means of knowing the check would not clear.”