Bank Settles OCC and CFPB Charges for Improper Fees and Deceptive Practices

A banking entity settled charges with the OCC and the CFPB (see here and here) for imposing multiple overdraft fees on customers’ accounts. The banking entity also settled charges with the CFPB for withholding credit card rewards from consumers and opening accounts without consumers' consent.

In separate Consent Orders, the OCC and the CFPB found that the bank charged (i) an initial $35 fee for declined checks or Automated Clearing House transactions due to insufficient funds and (ii) an additional $35 in fees if a merchant submitted the transaction for payment multiple times. The OCC and CFPB stated that the bank consequently caused "substantial injury to customers" by charging "tens of millions of dollars" in fees on resubmitted transactions. As a result of its actions, the OCC found that the bank violated FTC Act Section 5 and the CFPB found that the bank violated Consumer Financial Protection Act Sections 1031 and 1036.

To settle the charges, the bank agreed to pay two civil money penalties of $60,000,000 each to the OCC and the CFPB. The bank also agreed to redress all affected consumers for all unreimbursed representment fees in a total amount no less than $80,400,000 as stipulated by the CFPB’s consent order.

Separately, the CFPB found that the bank withheld cash and points rewards on credit cards by creating the "deceptive net impression" that bonuses connected to rewards credit cards were available to all consumers when the bonuses were only available to consumers who applied online. The CFPB stated that the bank also opened credit cards on consumers’ behalf without their consent and obtained reports on consumers without a legitimate purpose. As a result, the CFPB stated that the bank violated the Truth in Lending Act and its implementing regulation, Regulation Z, the Fair Credit Reporting Act and the Consumer Financial Protection Act.

To settle the charges, the bank must pay a $30,000,000 civil money penalty to the CFPB.