CFPB Issues Consent Order to Bank for Overdraft Practices
On July 14, 2016, the Consumer Financial Protection Bureau (CFPB) issued a consent order to Santander Bank for violations related to its overdraft practices. Santander Bank committed the following violations:
- Failed to obtain an affirmative “opt-in” from certain customers before charging them overdraft fees in connection with ATM and one-time debit card transactions
- Misled consumers about:
- the fees associated with opting into overdraft service for ATM and one-time debit card transactions
- the consequences of not opting in to overdraft service for ATM and one-time debit card transactions
- the nature of the sales calls seeking consumers’ consent to opt in to overdraft services for ATM and one-time debit card transactions
- the type of transactions covered by the overdraft service
The consent order requires Santander Bank to pay a $10 million civil money penalty. This type of enforcement action should at least encourage financial institutions to take another look at overdraft practices and procedures in relation to Regulation E and UDAAP.
CLA’s financial institution regulatory compliance team assists banks and credit unions nationwide in establishing regulatory compliance programs, conducting compliance testing, and training staff on regulations. Justin Robinson is a member of CLA’s regulatory compliance team and can be reached at justin.robinson@CLAconnect.com.
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