The Consumer Financial Protection Bureau announced today that it has fined Regions bank for charging overdraft fees to customers who had not opted-in for the coverage.
“Today the Consumer Financial Protection Bureau (CFPB) took action against Regions Bank for charging overdraft fees to consumers who had not opted-in for overdraft coverage. The bank also charged overdraft and non-sufficient funds fees on its deposit advance product despite claims that it would not. Regions has already refunded hundreds of thousands of consumers approximately $49 million in fees, and the consent order requires the bank to fully refund all remaining consumers. The Bureau also fined the company $7.5 million for its illegal actions.”
The CFPB says that this action is its first under the rules resulting from the Dodd Frank Act that require opt-ins for overdraft, which took effect in 2010. Regions found itself in a position where the structure of its products led to overdraft fees for customers who did not opt in. The lesson for the industry is that when new regulations are put in place, products and services must be carefully reviewed to ensure that no combination could lead to a violation of the regulations. Unintended consequences come with every change in the laws and rules, and compliance officers and product managers should be pessimists when reviewing the possibilities.
Overview by Ben Jackson, Director, Prepaid Advisory Service at Mercator Advisory Service
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