CFPB Agrees to $25 Million Settlement with National Bank for Misleading and Deceptive Marketing

On July 20, 2018, the CFPB filed a proposed judgment and consent order, settling a lawsuit the CFPB filed against a national bank for its allegedly deceptive marketing and sale of overdraft services.

Banks are required to obtain a consumer’s affirmative consent to “opt in” to the bank’s overdraft service before charging overdraft fees on one-time debit purchases and ATM withdrawals. In its lawsuit against the bank, the CFPB alleged that the bank concealed these fees from consumers—when attempting to obtain consent—by allegedly incentivizing branch employees to influence customers to “opt in,” using scripted conversations for customer interactions that failed to mention fees, structuring the opt-in discussion in a way that interfered with consumers’ ability to consider disclosures that would inform their decision, and directing branch employees not to provide consumers with information that might discourage them from opting in.  The Bureau claimed that these actions constituted violations of (1) Regulation E, 12 C.F.R. § 1005.17, an implementing regulation of the Electronic Fund Transfer Act; and (2) the prohibitions on deceptive and abusive conduct in the Consumer Financial Protection Act.

As recompense for these actions, the bank agreed to pay $25 million in restitution to customers who opened accounts with the bank and “opted-in” to the bank’s overdraft service before and/or during a specified three-and-a-half-year timeframe.  Additionally, the bank must pay a $5 million civil money penalty to the government, which the CFPB remitted due to a separate $3 million penalty payment imposed on the bank by the Office of Comptroller of the Currency for the same conduct contemplated by this order.  The settlement further requires the bank to participate in proper recordkeeping and compliance monitoring, and it enjoins the bank from committing any future violations.

The consent order can be found here.