U.S. District Judge Douglas Woodlock ruled last week that American Airlines Federal Credit Union (AAFCU) violated Massachusetts state and federal law when it took money out of customers' deposit accounts to pay separate credit card debt.
According to the complaint, Martino alleged that AAFCU's policies with respect to such accounts violate the anti-offset provisions of the Massachusetts Consumer Credit Cost Disclosure Act (MCCCDA) and the Federal Truth in Lending Act (TILA).
The credit union claimed that it has a valid security interest in the depository accounts and is therefore permitted to take funds from the accounts.
Judge Woodlock concluded that the combination of the Pre-Approval Certificate, the Credit Card Agreement, and Martino’s subsequent use of the credit card is insufficient to create a consensual security interest under both TILA and MCCCDA. AAFCU’s deduction of money from Martino’s deposit account to pay her credit card debts was the equivalent of an
offset, which is prohibited under TILA and MCCCDA.
Read the decision.
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I am surprised that the statutory lien provisions in the FCU Act were not discussed. Don't think it would have mattered. But a judge's opinion would have been interesting to see if would have made impact.
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