Heather Washington v. VyStar Credit Union
Heather Washington brought a breach of contract claim against VyStar Credit Union alleging overdraft fees were charged on signature-based debit card transactions even though her available balance was sufficient when she presented her card. Washington argued overdraft determinations were made at authorization, not at the time VyStar paid the merchant at settlement. The trial court dismissed, finding the account agreement unambiguously provided that overdrafts are determined at payment to the merchant. The Fifth DCA affirmed, holding that authorization and payment are distinct events and an authorization hold does not obligate VyStar to sequester those funds exclusively for the originating transaction.
Key facts
- Heather Washington maintained a checking account and debit card with VyStar Credit Union governed by an account agreement; she filed a class-action breach of contract suit alleging VyStar improperly charged overdraft fees on signature-based debit card transactions when her available balance was sufficient at the time she presented her card to the merchant.
- VyStar's account agreement expressly distinguished between authorization (a hold on available balance at point of sale) and payment (VyStar's actual transfer of funds to the merchant at settlement, which could occur hours or days later); the agreement repeatedly tied overdraft determinations to the time VyStar 'pays' an item.
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Holdings
- For signature-based debit card transactions, authorization and payment are substantively different events occurring at different times; an account agreement tying overdrafts to the time of…
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Why it matters
A significant win for financial institutions facing overdraft-fee class actions premised on the argument that authorization and payment are the same event. The Fifth DCA's analysis provides a clear template for… — full analysis with a trial
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