Lawsuit Against Target Alleges Its Debit Card Can Result in Multiple Fees for Insufficient Funds Transactions

September 15, 2018 07:15 AM

A Florida woman and North Carolina man have filed a proposed class action lawsuit against Target, alleging the company's debit card exposes customers to double, triple or even quadruple fee penalties for insufficient funds transactions - a fact the suit says the company fails to warn consumers about.

The lawsuit was filed in federal court in Minnesota Thursday by Michelle Dixon of Spring Hill, Florida and Charles Powell of Durham, North Carolina.


"A consumer could be hit, for example, with a $15 purchase with four fees. One returned payment fee from Target between $20 and $40, and up to three additional fees from your bank for insufficient funds," Melissa Weiner, a partner at Pearson, Simon and Warshaw, LLP, based in Minneapolis, said.

The lawsuit claims the debit card does not even attempt to deduct funds from a customer's account, or notify their bank of the transaction, until two to seven days after the purchase has been made. So consumers expecting the transaction to be accepted or declined immediately can be hit with multiple fees for insufficient funds as the transaction is submitted multiple times. 

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The lawsuit alleges the card uses a slower processing network than other debit cards, and does not cross reference account balances to determine whether sufficient funds are available to make a purchase prior to it being approved.

“So this could mean that by that time there may not be sufficient funds in your account, or there may not have been sufficient funds in the first place, which with a typical debit card, you would know immediately because it would be rejected by your bank," Weiner said.

The lawsuit also takes issue with the way Target markets the card, specifically the fact it is called a "debit card" when the lawsuit alleges it does not function as such, as well as the highlighting of the 5 percent discount the card offers customers.

Dixon, according to the lawsuit, attempted to use her Target debit card for a purchase of $43.18 on June 6, 2015. Target attempted to debit the amount on June 8. Dixon had insufficient funds at that time, so her bank charged her an NSF fee of $35 on June 9. Target also assessed a fee at that time.

"Plaintiff Dixon would not have made the transaction using her Target Debit Card if she had known the Target Debit Card did not function like a normal debit card, and if she had known that using the Target Debit Card would place her in jeopardy of several distinct fees," the lawsuit states. 

"If she had known either of these things, she would have chosen another payment method for her transaction."

Powell allegedly used his Target debit card for a purchase of $15.97 in April 2016. He had insufficient funds, so Target attempted to debit his account $15.49. 

His bank charged him a $25 NSF fee on April 25, and Target assessed a similar fee at that time.

Target allegedly attempted to re-debit the account on May 2, and Powell still had insufficient funds, so his bank again assessed a $25 NSF fee. This happened a third time when Target attempted to re-debit Powell's account on May 9, the suit claims.

"Accordingly, Plaintiff Powell incurred four fees for one purported insufficient funds event," the lawsuit states. 

It continues to say Powell would not have used his Target debit card if he had known about the possibility of being charged several distinct fees.

A spokesperson said the company had no comment on the lawsuit Thursday night.

If you believe you may have been injured by similar conduct, you can contact Pearson, Simon and Warshaw, LLP at 612-389-0600 or


Anthony Brousseau, Frank Rajkowski and Brandi Powell

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