For the second time in a decade, Regions Bank was found to be charging illegal overdraft fees, the government said Wednesday in a settlement that would require the bank to repay customers $141 million and pay an additional $50 million in fees.
In an investigation, the Consumer Financial Protection Bureau found that areas between 2018 and 2021 were charging overdraft fees on certain ATM withdrawals as well as some debit card purchases, even after the Alabama-based bank told customers that their accounts were There is enough money. cover the transaction.
The CFPB also found that field officials knew their systems were flawed, but stopped making adjustments to their practices until the bank could find ways to replace the revenue lost from fees. The agency said overdraft and non-sufficient funds charges – otherwise known as bounced check charges – accounted for about 18% of the bank’s non-interest income in 2019.
“Regions Bank suddenly generated millions of dollars in overdraft fees every year, even after its own employees warned that the bank’s practices were illegal,” agency director Rohit Chopra said in a statement. “Too often, large financial companies calculate that continuing to break the law is more profitable than adhering to it. We have more work to do to change this mindset.”
In a statement, Region said that although it disagreed with the bureau’s assessment of their business practices, it was happy to settle behind it.
“A year ago, the region stopped charging this particular overdraft fee,” Tara Plimpton, the region’s chief legal officer, said in a statement. “We took this action as part of a wide range of enhancements… (which include) updating the Bank’s posting orders and transaction processing so that customers are aware of the funds available to make purchases while avoiding fees. to have a clear view.”
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This is not the first time that Region has been fined for overdraft fee practices. In 2015, the bureau ordered the field to refund $49 million and pay a $7.5 million fine for charging overdraft fees. Customers in those regions were charged for overdrafts when they opted out of the service.
The CFPB under President Biden, which was created to protect consumers from financial abuse in the wake of the 2008 financial crisis, has taken a dim view of hefty overdraft fees. The agency said earlier this year that consumers payWhich describes it as an exorbitant fee.
During the pandemic, the average fee for excess withdrawal is a, according to Bankrate. According to the Center for Responsible Lending, large U.S. banks have generated nearly $9 billion in revenue annually from overdrafts, ATM and other fees in recent years.