A class action has been filed against National Financial Services LLC and Fidelity Brokerage Services LLC, both of which are subsidiaries of Fidelity Investments, arising from the alleged misuse of monies withdrawn from class members' accounts for use in an electronic bill paying service called "BillPay." The action alleges that, when a class member uses BillPay, the defendants transfer the class member's funds to a separate account prior to making the requested payment, allowing the defendants to earn interest on the funds while they are being held in the special account. The BillPay users are seeking compensatory, statutory and punitive damages as well as all fees, costs and interest.

The defendants maintain a service known as "BillPay." BillPay is offered to bank customers as a means of paying creditors electronically, with the use of a computer. Class members assumed that once a transfer was requested, it was done immediately and the funds passed from the class member's account to the creditor's account. However, the action alleges that, in fact, National Financial Services actually transferred the funds to an intermediate account where the funds were held prior to transfer. These accounts are interest-bearing accounts, with the interest paid to Fidelity Brokerage Services.

Class members allege that this information was not disclosed to consumers who signed up for the service. Accordingly, the action asserts that the defendants' actions violate the federal Electronic Funds Transfer Act and amount to negligent and intentional misrepresentation and breach of fiduciary duty, contract, and consumer protection laws.

Fidelity's BillPay service is different from other companies' similarly-named services, such as Yahoo! Bill Pay.