On August 1, the U.S. Court of Appeals for the 9th Circuit affirmed the dismissal of claims under California’s Unfair Competition Law (UCL) against a federal credit union, holding that federal law preempts state regulation of credit union account fees. The case arose from a customer’s claim that a $15 returned-check fee — for which he was not at fault — was an unfair and unlawful business practice under the UCL. The 9th Circuit rejected the claims on the basis of preemption, citing 12 C.F.R. § 701.35, which provides that “[a] federal credit union is empowered to determine … fees or charges [in connection with check deposits] … [and to] the extent that state law attempts to regulate such activity, it is preempted.” The appeals court emphasized that all state laws regulating account fees — whether general or specific — do not apply to federal credit unions. The decision aligned with those of other courts and noted the credit union stopped charging returned check fees as of November 1, 2023.
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