On September 28, 2022, the Consumer Financial Protection Bureau (CFPB) announced that it ordered an Alabama bank to pay over $190 million to resolve allegations that it charged its customers surprise overdraft fees between August 2018 and July 2021.
The CFPB alleges that the bank was charging consumers surprise overdraft fees, known as authorized-positive fees, on certain ATM withdrawals and debit card purchases after telling consumers they had sufficient funds at the time of the transactions. According to the CFPB, the fees constituted unfair and deceptive trade practices in violation of the Consumer Financial Protective Act of 2010 (CFPA), 12 U.S.C. §§ 5531(a) and (c)(1), and 5536(a)(1)(B).
The CFPB ordered the bank to pay a $50 million civil money penalty into the CFPB’s victims relief fund, and to refund at least $141 million to consumers harmed by its surprise overdraft fees. The order further bans the bank from charging authorized-positive overdraft fees in the future.
The consent order is the second entered into between the CFPB and the Alabama bank concerning overdraft fees. The first, previously covered here, was signed in 2015 and ordered the bank to refund $49 million to consumers and to pay a $7.5 million penalty.
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