Case: In re: Regions Bank
Issue: Regions Financial Corp.’s (Regions) $7.5 million settlement with the Consumer Financial Protection Bard (CFPB) for charging customers unlawful overdraft fees.
Case Summary: The CFPB fined Regions $7.5 million to resolve allegations that it charged overdraft fees to customers who did not “opt-in” to the program.
According to the CFPB, Regions allowed customers to link their checking and savings as backup should one account run low, but Regions did not give these customers with linked accounts the option to “opt-in” to the overdraft fee program as required by the Federal Reserve System’s (Fed) Opt-In Rule. The CFPB claimed that Regions charged unlawful overdraft and non-sufficient fund fees rather than rejecting the transactions when the funds were low.
In May 2012, Regions self-reported to the CFPB that it did not obtain “opt-ins” from existing or new linked-covered customers, and did not program its systems to prevent linked-covered from being assessed fees. Regions voluntarily repaid approximately $49 million to more than 200,000 customers beginning in December 2012.
Under the terms of the Consent Order, Regions is required to (1) pay a $7.5 million penalty; (2) correct all instances of negative credit reporting resulting from unlawful fees; (3) and hire consultants to ensure refunds are provided to all remaining affected customers. Regions did not admit or deny any wrongdoing.
Bottom Line: The penalty against Regions is the first imposed by the CFPB related to overdraft fees.