Consumer Bureau penalizes Regions for illegal fee scheme
The Consumer Financial Protection Bureau (CFPB) has ordered Regions Bank to pay $191 million in refunds and penalties as a result of an illegal surprise overdraft fee scheme it foisted on customers.
From August 2018 through July 2021, Regions charged customers surprise overdraft fees on certain ATM withdrawals and debit card purchases. The bank charged overdraft fees even after telling consumers they had sufficient funds at the time of the transactions. Financial regulators have long cautioned banks against charging this type of overdraft fee. The CFPB also found that Regions leadership knew about and could have discontinued its surprise overdraft fee practices years earlier, but they chose to wait while Regions pursued changes that would generate new fee revenue to make up for ending the illegal fees.
“Regions Bank raked in tens of millions of dollars in surprise overdraft fees every year, even after its own staff warned that the bank’s practices were illegal,” said CFPB Director Rohit Chopra. “Too often, large financial firms make a calculation that continuing to break the law is more profitable than following it. We have more work to do to change this mentality.”
The enforcement action taken by CFPB:
- Requires Regions to provide at least $141 million in redress to affected consumers: Regions must refund at least $141 million in illegally assessed authorized-positive overdraft fees.
- Bans Regions from charging authorized-positive fees: Regions is prohibited from charging authorized-positive overdraft fees.
- Assesses a $50 million fine: Regions must pay a $50 million penalty to the CFPB, which will be deposited into the CFPB’s victims relief fund.