RSSThe Consumer Financial Protection Bureau has fined Regions Bank for charging customers for overdraft coverage they had not opted-in to receive.
The bank also charged overdraft and non-sufficient funds fees on its deposit advance product despite claims that it would not, the bureau said.
The CFPB says that Regions’ customers who linked savings accounts or lines of credit to checking accounts were never given the opportunity to opt-in to overdraft coverage, yet were charged fees instead of having transactions declined.
In 2010, federal rules took effect which prohibited banks and credit unions from charging overdraft fees on ATM and one-time debit card transactions unless consumers affirmatively opted in for such coverage.
Regions also waited nearly a year after discovering the violations in August 2011 before reporting them to the CFPB.
The bank also charged overdraft and non-sufficient funds fees with its deposit advance product, despite claiming it would not. Specifically, if the bank collected a payment causing a consumer’s checking account balance to drop below zero, Regions would either cover the transaction and charge an overdraft fee or reject its own transaction and charge a non-sufficient funds fee, the bureau said.
At various times from November 2011 until August 2013, the bank charged about $1.9 million to more than 36,000 customers, the bureau said.
Regions is required to hire an independent consultant to identify and repay any remaining affected consumers in addition to the CFPB’s $7.5 million fine. The bank had previously refunded nearly $35 million to more than 200,000 consumers in December 2012 and an additional $12.8 million in December 2013 after further affected accounts were identified.
“The CFPB is taking its first enforcement action under the rules that protect consumers against illegal overdraft fees by their banks,” said CFPB Director Richard Cordray. “Regions Bank failed to ask consumers if they wanted overdraft service before charging them fees. In the end, hundreds of thousands of consumers paid at least $49 million in illegal charges. We take the issue of overdraft fees very seriously and will be vigilant about making sure that consumers receive the protections they deserve.”
