Some Regions Bank customers will get refunds after the Consumer Financial Protection Bureau (CFPB) found the bank had imposed “surprise” overdraft fees after telling consumers they actually had sufficient funds at the time of the transactions.
According to the CFPB, the fees were imposed on customers making ATM and debit transactions from August 2018 through July 2021. The bank was ordered to pay $50 million into the CFPB’s victims' relief fund and to refund at least $141 million to customers.
“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.”
Regions Bank has 1,700 brick-and-mortar branches and 2,000 ATMs in 16 states, mostly in the Southeast and Midwest.
Financial regulators have repeatedly warned banks about charging overdraft fees in these types of cases. The regulator claims top executives at the bank knew about the practice and could have ended it years ago.
Crackdown on ‘junk’ fees
The CFPB order came in the same week that the Biden administration declared war on so-called junk fees -- hidden cancellation charges and convenience fees that are sometimes added to some goods and services.
“Unnecessary hidden fees, known in the parlance as ‘junk fees,’ are hitting families at a time when they can’t afford it,” Biden said in remarks at a meeting of the White House Competition Council. “It hits middle- and working-class families especially hard.”
Biden says federal regulators will investigate companies that tack on these fees without making them transparent, such as termination fees some cellphone carriers charge customers who are changing providers. Biden expects the Council to come back with a plan to reduce or eliminate the fees.
This week the U.S. Department of Transportation said it would require airlines to disclose upfront if they charge a rebooking fee for canceled flights.
“You know, it could have cost you up to $200 to have to rebook a flight, and that’s $200 you can pay your monthly bills or your electric bill or whatever for it with,” Biden said.