On December 23, 2015, the FDIC entered three separate consent orders for unfair and deceptive acts under Section 5 of the FTC Act, with aggregate penalties and restitution totaling nearly $40 million.
First, the FDIC entered a consent order with The Bancorp Bank, Wilmington, Delaware. The consent order centered around the Bank’s prepaid cards that it issues on behalf on several non-bank entities. The FDIC alleged that the Bank did not provide the promised protections to consumers in resolving their account errors; did not provide promised benefits as part of a rewards program; and charged deceptive debit decline fees.
Because Bancorp was the issuing bank for these entities, it was responsible for ensuring the programs’ legal compliance. Bancorp will now pay a $3 million civil penalty and $1.3 million in restitution, as well as implement remedial measures.
Second, two consent orders involve WEX Bank and Higher One’s “One Account” which is a debit-card based product that operates to disburse financial aid to students. WEX Bank is affiliated with Higher One and oversees its One Account. The FDIC alleged that Higher One’s website and associated materials omitted certain material facts in violation of Section 5, such as information about fees, features, and limitations.
As a result, Higher One must pay $2.23 million and WEB Bank will pay $1.75 million in penalties. Further, they must jointly pay $31 million in restitution to allegedly harmed consumers.
The consent order concerning Bancorp is available at: https://www.fdic.gov/news/news/press/2015/pr15103a.pdf?source=govdelivery&utm_medium=email&utm_source=govdelivery.
The consent order concerning WEX Bank is available at: https://www.fdic.gov/news/news/press/2015/pr15102a.pdf?source=govdelivery&utm_medium=email&utm_source=govdelivery.
The consent order concerning Higher One is available at: https://www.fdic.gov/news/news/press/2015/pr15102b.pdf?source=govdelivery&utm_medium=email&utm_source=govdelivery.