BOSTON—A U.S. District Court here has ruled that the $5.8-billion American Airlines FCU, based in Fort Worth, Texas, violated Massachusetts state and federal law when it took money out of members’ deposit accounts to pay separate credit card debt.
Moreover, the court ordered that questions around whether there is potential for class certification be addressed.
The ruling by Judge Douglas Woodlock resulted from a complaint filed on behalf of CU member Lisa Martino. Martino alleged that AAFCU’s policies with respect to deposit accounts violate the anti-offset provisions of the Massachusetts Consumer Credit Cost Disclosure Act (MCCCDA) and the Federal Truth in Lending Act (TILA).
AAFCU claimed that it has a valid security interest in the depository accounts and is therefore permitted to take funds from the accounts, Judge Woodlock’s decision explained.
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.”
Judge Woodlock granted Martino’s amended motion for summary judgment and ordered that the parties, on or before Sept. 16, 2015, submit a proposal for bringing the case to final judgment “including resolution of the question of class certification now that liability is established.”