Credit Unions Score First Court Win In Growing Fiserv Fight
By CU Today Staff —
LOS ANGELES— A federal judge has refused to dismiss a lawsuit brought by $73-million POLAM FCU against core processor Fiserv, allowing the credit union to move forward with claims that the company breached its contract, misrepresented the security of its systems and improperly imposed termination-related fees.
In a June 18 ruling, U.S. District Judge John F. Walter denied Fiserv's motion to dismiss in its entirety, preserving all eight claims asserted by POLAM FCU. The decision marks the first ruling on a motion to dismiss among a growing group of credit unions pursuing similar litigation against the payments and core-processing giant, NERKO PLLC stated.
POLAM FCU is part of a coalition that also includes Self-Help Credit Union, FiCare Federal Credit Union, Educational & Governmental Employees Federal Credit Union and Midwest Family Federal Credit Union. The credit unions allege Fiserv misrepresented the security of its systems, violated provisions of its master services agreement and attempted to assess improper early-termination and deconversion fees.
The ruling follows a series of disputes between Fiserv and credit unions over contract terms, billing practices and cybersecurity issues. As CUToday.info has previously reported, Fiserv has settled similar lawsuits brought by Bessemer System Federal Credit Union, Cencap Federal Credit Union and U.S. Court House SDNY Federal Credit Union.
"Our Board of Directors and I are extremely grateful for our legal representation and encouraged by this significant first win against the 'big guys,'" POLAM FCU CEO Jennifer Audette said in a statement.
Audette, who has previously criticized Fiserv's service and billing practices, said smaller credit unions often struggle to gain attention from large vendors despite relying on them to safeguard member data and support critical operations.
Charles Nerko of NERKO PLLC, one of the attorneys representing POLAM FCU, called the ruling an important step for credit unions seeking accountability from technology providers.
"The legal process is a key tool credit unions can use to turn vendor frustrations into recoveries," Nerko said, adding that the firm is representing a growing coalition of credit unions pursuing claims against Fiserv alongside co-counsel Hecht Partners.
Originally reported by CU Today.