Martin v. Redstone Federal Credit Union

This class action lawsuit was filed against Redstone Federal Credit Union for allegedly assessing unlawful overdraft fees on accounts with sufficient available balances. The plaintiff, John Martin, claimed the credit union manipulated the posting order of debit transactions and charged multiple insufficient fund fees on single transactions, violating its own contract and the Electronic Fund Transfer Act. The complaint also alleged that the fee structure disproportionately harmed low-income members and was not adequately disclosed. Filed on September 19, 2025, the case sought restitution, statutory damages, and injunctive relief to reform the credit union’s fee practices. The litigation highlighted broader industry concerns about transparency in banking charges.

In early 2026, the court preliminarily approved a $14.5 million class settlement. Redstone Federal Credit Union agreed to compensate affected members, eliminate certain re-sequencing practices, and enhance fee transparency without admitting wrongdoing.

Whether Redstone Federal Credit Union breached its account agreement and consumer protection laws by processing transactions in a sequence that maximized overdraft fees, and whether its fee disclosures met regulatory standards under the Truth in Savings Act and EFTA.

The settlement prompted several other credit unions to voluntarily revise their overdraft policies and improved consumer awareness regarding transaction posting manipulation. It reinforced regulatory scrutiny on non-bank financial institutions and contributed to ongoing debates about fair fee structures for underserved communities.