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1 IN THE UNITED STATES DISTRICT COURT DISTRICT OF RHODE ISLAND GARY HUNT, individually and on behalf of all others similarly situated, v. Plaintiffs, RES CITIZENS, N.A., CITIZENS BANK OF PENNSYLVANIA, and CITIZENS FINANCIAL GROUP, INC., Defendants. CLASS ACTION ORIGINAL CLASS ACTION COMPLAINT JURY TRIAL DEMANDED Plaintiff Gary Hunt is a Citizens customer. On behalfof himself and a proposed class of similarly situated Citizens customers ("the Class"), Mr. Hunt seeks damages pursuant to the Truth in Lending Act ("TILA"), 15 U.S.C. 1601, et seq., based on Citizens' unsolicited issuance of credit cards, and Citizens' unauthorized offset of funds against consumer deposit accounts. Mr. Hunt's allegations are based on Citizens' application of an unsolicited, high-cost credit feature to the debit card he used in connection with his account, effectively turning his debit card into a credit card, and on the astronomically high charges Citizens took from his deposit account based on his access ofthis undisclosed credit feature. JURISDICTION AND VENUE 1. Jurisdiction is conferred on this Court by 15 U.S.C. 1640(e). 2. Venue lies in this District pursuant to 28 U.S.C PARTIES 3. Plaintiff Gary Hunt ("Plaintiff' or "Mr. Hunt") is an individual who resides in Woonsocket, Rhode Island. Courthouse News Service 4. Defendant RES Citizens, N.A. is a national bank headquartered in Providence,

2 Rhode Island. RES Citizens, N.A. does business throughout New England and the Midwest under the brand names "Citizens Bank" or "Charter One." 5. Defendant Citizens Bank ofpennsylvania is a Pennsylvania state chartered bank with dual headquarters in Pittsburgh, Pennsylvania and Philadelphia, Pennsylvania. Citizens Bank ofpennsylvania does business in Pennsylvania, New Jersey, and Virginia. 6. Defendant Citizens Financial Group, Inc. is a commercial bank holding company headquartered in Providence, Rhode Island. Defendants RES Citizens, N.A. and Citizens Bank ofpennsylvania are both subsidiaries ofcitizens Financial Group, Inc. All three Defendants are referred to hereinafter collectively as "Citizens" or "the Bank." FACTUAL ALLEGATIONS 7. Citizens' credit feature belongs to a new category of overdraft loans called "bounce loans" or "bounce protection." These loans are not traditional overdraft lines ofcredit, and they do not reflect some banks' occasional, ad hoc practice of covering a consumer's bounced check as a courtesy. Instead, Citizens' loans are deliberate, systematic attempts to hook consumers onto overdrafts as a form of high-cost credit. Charges from bounce loan products such as Citizens' credit feature constitute a major source ofprofit for banks. 8. In addition to access by writing checks against insufficient funds, Citizens permits customers to access its credit feature through ATM withdrawals and through debit card point-of-sale transactions. When accessed in this manner, Citizens' credit feature is an even bigger trap for the unwary: customers do not expect to be able to overdraw their accounts by means of these devices, and are provided with no warning or disclosures even at the ATM or debit card point ofsale that they are about to access Citizens' credit feature

3 9. Furthermore, when accessed by ATM or debit cards, Citizens' credit feature serves no other purpose other than to extend exorbitantly-priced credit, because consumers do not "bounce" these types oftransactions. Traditionally, such transactions are declined with no charge when consumers have insufficient funds in their accounts to cover them. Thus, Citizens' decision to program its computers to permit customers to obtain cash in excess oftheir account balance, thus allowing overdrafts when there are otherwise no funds available, is a deliberate choice to permit overdrafts where none would have occurred, solely for the purpose of collecting additional money from customers. 10. In completing such transactions, Citizens advances its own funds to the customer in an ATM transaction or to the merchantin a debit card transaction. Citizens imposes a charge for this advance. Citizens offsets the deposit accounts of its customers to collect the overdraft fees without their affirmative consent. 11. The paymentofatm and debit card overdrafts is a deliberate action by Citizens, as the ability to payor decline an ATM or debit card transaction that overdraws the customer's account is within Citizens' control. Upon information and belief, Citizens offers bank accounts without the ability to overdraw the account using the ATM or debit card. Citizens or its agents willfully acted to include the ability to overdraw using an ATM or debit card in its credit feature. By including this ability, pursuant to which Citizens routinely, deliberately, and systematically pays customer overdrafts, Citizens issued prohibitively expensive credit cards to its customers without their requesting Citizens to do so, and without their submitting credit card applications. 12. Mr. Hunt's experiences with Citizens' credit feature are typical of the experiences ofthe members ofthe Class. Mr. Hunt had a checking account at Citizens. A true - 3 -

4 and correct copy of a printout of the transaction history for Mr. Hunt's account for February 2008 through February 2009 is attached hereto as Exhibit "A" and incorporated herein by reference. 13. Between February of 2008 and February of 2009, Citizens assessed twelve charges against Mr. Hunt's account, each in the amount of $39.00, pursuant to the credit feature it placed on Mr. Hunt's account. 14. Each ofthe charges Citizens assessed is associated with a small-dollar overdraft stemming from an ATM or debit card point ofsale transaction. For the time period reflected on Exhibit "A" of February, 2008 through February, 2009, Mr. Hunt's account was overdrawn in the aggregate by $80.03 (on one occasion, by as little as $0.61). Every time Mr. Hunt used his Citizens card, Citizens advanced its funds to Mr. Hunt or to merchants to cover these transactions, and proceeded to collect the amounts ofthese advances plus an additional $39.00 from Mr. Hunt's account every time Mr. Hunt made a deposit to his account (usually within days ofthe transactions). 15. Accordingly, for a total of $80.03 in small-dollar, short-term loans, Citizens charged Mr. Hunt $ a $39.00 charge each time Citizens loaned Mr. Hunt about $6.67 (on average) for only a couple ofdays. 16. Mr. Hunt neither requested nor applied for a credit card from Citizens to get these very expensive short-tenn loans, nor did Mr. Hunt grant Citizens authorization in writing in accordance with a credit plan to offset any indebtedness arising in connection with consumer credit transactions against any ofhis funds that Citizen held on deposit. CLASS ACTION ALLEGATIONS 17. Mr. Hunt brings this action on behalf of himself and a Class of all other persons - 4-

5 similarly situated pursuant to Fed. R. Civ. P The Class consists of: All persons in the United States against whose individual consumer deposit accounts Citizens assessed charges pursuant to the credit feature ofthe accounts described above for overdrawn items resulting from an ATM card withdrawal or a debit card purchase. Excluded from the Class are persons whose only accounts with Citizens were, or are, business checking or other business deposit accounts; Citizens; any parent, subsidiary, or affiliate of Citizens or any employees, officers, or directors of Citizens; legal representatives, successors, or assigns of Citizens; and any justice, judge or magistrate judge ofthe United States who may hear the case, and all persons related to any such judicial officer, as defined in 28 U.S.C. 455(b). 19. There are questions oflaw and fact that are common to all members ofthe Class, which questions predominate over any question affecting only individual Class members. The principal common issues are: a. whether Citizens violated TILA by offsetting credit feature charges against consumer deposit accounts; b. whether Citizens violated TILA's prohibition against the unsolicited issuance of credit cards; and c. whether Class members have a right to recover damages by virtue of Citizens' failure to comply with TILA. 20. The only individual questions concern the computation of damages to be awarded each Class member, which questions can be determined by a ministerial examination - 5 -

6 of the relevant files. For notice purposes, Class members can be identified using Citizens' computerized databases ofcustomer records. 21. Mr. Hunt's claims are typical of the claims of all of the other Class members, because his claims are based on the same legal and remedial theories as the claims ofthe Class. 22. Mr. Hunt will fairly and adequately protect the interest of all Class members in the prosecution of this Action and in the administration of all matters relating to the claims stated herein. Mr. Hunt is similarly situated with, and has suffered similar injuries as, the members of the Class he seeks to represent. Mr. Hunt has retained counsel experienced in handling class action lawsuits involving United States federal law claims and state consumer law claims. Neither Mr. Hunt nor his counsel has any interest which might cause him not to vigorously pursue this action. 23. A class action is superior to other available methods for the fair and efficient adjudication ofthe controversy, in that: a. the losses suffered by the Class members are such that prosecution of individual actions is impractical or economically unfeasible; b. by contrast, the profits obtained by Citizens as a result of its unlawful practices are substantial; c. in the absence of the class action device, Mr. Hunt and the Class would be left without a remedy for the wrongful acts alleged, and Citizens will be unjustly enriched; d. the prosecution of separate lawsuits by individual members of the Class would create the risk of inconsistent adjudications with respect to individual Class members, which would establish incompatible standards ofconduct for Citizens, - 6-

7 making concentration of the litigation concerning this matter in this Court desirable; e. the claims of the representative Plaintiff are typical of the claims of the Class; and f. no unusual difficulties are likely to be encountered in the management of this action as a class action. 24. The Class is so numerous as to make it impracticable to join all members as Plaintiffs. Based upon the investigation of counsel, the number of members of the Class is estimated to be in excess of 100,000 persons. CAUSE OF ACTION (Violation ofthe Truth in Lending Act, 15 U.S.c et seq.) 25. Mr. Hunt repeats and realleges all paragraphs above as ifset forth fully herein. 26. The statutory definition of "credit," 15 U.S.C. 1602(e), includes the right "to incur debt and defer its payment." By using its funds to pay Mr. Hunt's and the Class' ATM and point of sale overdrafts (and in fact providing them with cash funds through ATM withdrawals) and then requiring repayment of the ATM and point of sale overdrafts, Citizens granted them the right to "incur debt and defer its payment" pursuant to TILA, 15 U.S.C. 1602(e). Citizens thus extended "credit" to Mr. Hunt and the Class pursuant to TILA through the credit feature oftheir checking accounts. 27. The statutory definition of "creditor," 15 U.S.C. 1602(f), includes a person who regularly extends consumer credit which is subject to a finance charge or payable by agreement in more than four installments. Regulation Z, 12 C.F.R (a)(17), note 3, which implements TILA, defines "regularly" as more than 25 times in the preceding calendar - 7 -

8 year. Upon information and belief, Citizens has extended consumer credit more than 25 times in the preceding year. 28. The statutory definition of"creditor," 15 U.S.C. 1602(f), also includes any card issuer in the case ofany open-end credit plan involving a credit card. The definition of "credit card" under Regulation Z, 12 C.F.R (a)(l5), also includes any card that may be used from time to time to obtain credit. 29. According to both of these definitions of "creditor," Citizens acted as a "creditor" pursuant to TILA. 15 U.S.C. l602(f). When Citizens' credit feature is applied to ATM cards and debit cards, these cards become "credit cards." Because Citizens deliberately, regularly, and systematically pays all customer overdrafts pursuant to its credit feature, the ATM and debit cards are "credit cards" pursuant to TILA. 30. By issuing ATM cards and debit cards to Mr. Hunt and the Class in connection with its credit feature, Citizens violated TILA's prohibition against the unsolicited issuance of credit cards, 15 U.S.c. 1642, because these ATM cards and debit cards are credit cards as defined by TILA and Regulation Z, 12 C.F.R (a)(15). 31. Additionally, by offsetting the accounts of Mr. Hunt and the Class in connection with ATM card and debit card transactions made pursuant to its credit feature, Citizens violated TILA's prohibition against credit card issuers offsetting cardholders' indebtedness against funds held on deposit with card issuers in the absence of the affirmative consent of Mr. Hunt and the Class, pursuant to 15 U.S.C. 1666h(a). 32. Mr. Hunt and each Class member is entitled to the full measure of remedies available pursuant to TILA, including, but not limited to, damages

9 REQUEST FOR RELIEF WHEREFORE, Plaintiff, on behalf of himself and the Class, requests the following relief: 1. An order certifying that this action is properly brought and may be maintained as a class action under Rule 23 of the Federal Rules of Civil Procedure, that Plaintiff be appointed as Class Representative, and that Plaintiffs counsel be appointed Class Counsel; 2. Damages pursuant to 15 U.S.C. 1640; 3. An injunction preventing Citizens from continuing the unlawful conduct alleged herein; 4. An award ofreasonable attorneys' fees and costs; and 5. Such other reliefat law or equity as this Court may deem just and proper. DATED this /e-#.day ofaugust, Peter N. Wasylyk (RI Bar # 3351) LAW OFFICES OF PETER N. WASYLYK 1307 Chalkstone Avenue Providence, RI (~elephone) (facsimile) - 9 -

10 Andrew S. Kierstead LAW OFFICE OF ANDREW KIERSTEAD 1001 SW 5th Avenue, Suite 1100 Portland, OR (telephone) (facsimile) Marc R. Stanley Roger L. Mandel Martin Woodward STANLEY, MANDEL & lola, L.L.P Monticello Avenue, Suite 750 Dallas, TX (telephone) (facsimile)