The Consumer Financial Protection Bureau (CFPB) handed down a $7.5 million penalty against Regions Bank for its overdraft fees policies.
The penalty was on top of Regions having to refund $49 million in illegally charged overdraft fees to its customers. The CFPB, the government watchdog that protects consumers from illegal activity by financial institutions, said Regions charged overdraft fees to customers who were never given the opportunity to choose whether they wanted overdraft protection.
“Regions Bank failed to ask consumers if they wanted overdraft service before charging them fees,” CFPB Director Richard Cordray said when announcing the fine and refunds. “In the end, hundreds of thousands of consumers paid at least $49 million in illegal charges.”
Starting in 2010 banks were required to give their customers the choice of whether they wanted to “opt-in” to overdraft protection. Should they make that choice they would have to pay a fee if they overspent their account and the bank covered it.
For those who don’t choose overdraft protection, a charge that exceeded their ability to pay would simply be declined as the cash register. Regions, according to the CFPB, behaved as though its customers made the choice to opt-in and assessed them $36 each time they made a charge that exceeded their account balance.
Regions has about 1,700 branches throughout the South and Midwest. According to Regions, a “small subset” of its customers had been unfairly charged overdraft fees.
The bank said it reported its errors to the CFPB and began issuing refunds.
It was the first action against a financial institution over overdraft fees, the CFPB said, and the fine was lowered because Regions Bank reported the violations and cooperated in the investigation.
There are an increasing number of consumers who are choosing to file individual overdraft fees lawsuits or join class action overdraft fees lawsuits against credit unions, alleging corrupt policies and violations which have unfairly charged customers overdraft fees.
If you or someone you know has been subjected to excess or heavy overdraft fees or account closures and believe your credit union may be at fault, you may be able to join a overdraft fees class action lawsuit.
Do YOU have a legal claim? Fill out the form on this page now for a free, immediate, and confidential case evaluation. The attorneys who work with Top Class Actions will contact you if you qualify to let you know if an individual lawsuit or class action lawsuit is best for you. Hurry — statutes of limitations may apply.
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