Regions Bank Fined $7.5 Million for Unlawful Overdraft Practices
Today, Regions Bank was fined $7.5 million by the Consumer Financial Protection Bureau for unlawfully charging thousands of consumers for overdraft protection. The bank also charged overdraft and non-sufficient funds fees on its deposit advance product when they had promised consumers these fees would not be levied.
This is the first action by the CFPB against a bank for overdraft practices.
Federal rules imposed in 2010 require banks to ask customers whether they want overdraft protection, not just automatically put it into effect. Consumers have to “opt in” and agree to pay a fee if the bank has to cover any shortfall between what is in a consumer’s account and the amount of the transaction or withdrawal. If there is no overdraft protection, the transaction is simply declined.
Regions assessed fees of up to $36 on overdrafts on hundreds of thousands of customers.
In addition to the $7.5 million in fines it must pay to the CFPB’s Civil Penalty Fund, the bank has already refunded $49 million to customers. The bank must also correct the credit reports of all customers affected by these overdraft charges.
“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,” said CFPB Director Richard Cordray in a statement. “We take the issue of overdraft fees very seriously and will be vigilant about making sure that consumers receive the protections they deserve.”
Regions has approximately 1,700 branches and 2,000 ATMs throughout 16 states.