California’s Credit Unions issued the following Risk Alert this week to highlight two key overdraft-related concerns:

• Law firms targeting credit unions over overdraft practices.
• Upcoming $14 overdraft fee cap for California state-chartered credit unions, effective January 1, 2026.

Law Firm Targeting Credit Unions: Overdraft Practices

California’s Credit Unions (the league) has learned that a website and social media advertisements, apparently sponsored by a class action law firm, are actively targeting financial institutions, including credit unions, by soliciting consumers to serve as plaintiffs in potential lawsuits. The firm appears to be trolling for litigation opportunities, with several open “investigations” across a range of topics, including overdraft practices.

Both the website and the advertisements invite credit union members to contact the firm if they have been charged overdraft fees. The website is: ClassLawGroup.com.

While the firm avoids making specific defamatory allegations, the implication of these “investigations” still poses reputational risk. We want to make you aware of these efforts in case your credit union is contacted by concerned members or volunteers.

Here are some important steps you can take to protect your credit union:

• Contact your attorney right away and share any solicitation, internet or social media posting, or demand letter received.
• Notify your insurer if applicable (in consultation with counsel).
• Gather and retain documentation from the past five years, including: Disclosures, account agreements, amendments, overdraft opt-in/opt-out forms, and fee schedules; Policies and procedures related to overdraft/NSF fees and practices; Records of how disclosures and amendments were communicated to members; Any advertisements, signage, or marketing materials on overdraft/NSF services; Reports on overdraft and NSF fee income.
• Review overdraft practices and disclosures with legal counsel regularly to determine whether adjustments should be made to reduce litigation risk.
• Notify California’s Credit Unions if you have been targeted so we can track trends and provide additional support.

​For additional information or to report predatory law firms, contact Lisa Quaranta, California’s Credit Unions’ Vice President of Regulatory Advocacy, at 909-212-6063 or lisaq@ccul.org.

$14 Overdraft Fee Cap Effective January 1, 2026 for California State-Chartered Credit Unions

Reminder: Senate Bill 1075 (SB 1075), signed into law in September 2024, amended the California Financial Code to limit overdraft and nonsufficient funds (NSF) fees charged at credit unions and imposed new notification requirements.

Applicability: SB 1075 applies to California state-licensed credit unions and state-licensed credit unions doing business in California.

Effective Dates: The overdraft/NSF notification requirements began in January 2025. The maximum overdraft/NSF fee limitation will take effect on January 1, 2026.

Fee Cap: Effective January 1, 2026, Overdraft and NSF fees are capped at $14 per occurrence.

Recommended Actions: California state-chartered credit unions should consider the following actions in preparation for the January 1, 2026, overdraft/NSF fee cap:

• Update TISA fee schedule (a member change in terms notice is not required).
• Update Reg E Overdraft Opt-in forms.
• Update overdraft and NSF policies and procedures.
• Provide training to branch and member service staff.
• Ensure the credit union’s core processing system is updated to charge revised fee.
• Model the impact of a $14 cap on overdraft/NSF income.
• Document changes and controls for examiner review.

More Information:

• CA Fin Code § 14053.
• November 2024 California Credit Union League Compliance Bulletin (Note – the CFPB overdraft rule for large institutions referenced in this bulletin was repealed via the Congressional Review Act on May 9, 2025).

If you have any questions regarding this information, contact the Compliance Hotline at 844-731-6072 or CANV@VICLARITYUS.COM. Our hotline is a membership benefit powered by ViClarity, a company of California’s Credit Unions.