Compliance Blog

May 04, 2015

CFPB Enforcement Action for Alleged Unlawful Overdraft Practices; April 2015 NCUA Report; March NCUA Board Meeting Video

Written by Bernadette Clair, Senior Regulatory Compliance Counsel

CFPB Enforcement Action for Alleged Unlawful Overdraft Practices. Last week, the CFPB announced its first enforcement action for alleged violations of Regulation E’s requirement to obtain affirmative consumer opt-in before charging a fee for one-time debit and ATM overdrafts. (See, 12 C.F.R § 1005.17(b)(1).  The target of the enforcement action, Regions Bank (“Regions” or “bank”), also allegedly made deceptive misrepresentations regarding overdraft fees assessed in connection with linked accounts and overdraft and NSF fees assessed in connection with loan repayments on the bank’s deposit advance product.

Specifically on the issue of affirmative consumer opt-in prior to charging overdraft fees, it appears that the customers affected were those who had linked their checking accounts to savings accounts or lines of credit to cover overdrafts. According to the consent order, the CFPB found that in instances where an ATM or one-time debit transaction exceeded the available balance in both the checking and the linked account, the bank paid the transaction and charged an overdraft fee of up to $36. However, because the bank had erroneously determined that its linked accounts were not subject to the opt-in requirement, and had therefore not obtained affirmative consumer opt-in, the fees were charged in violation of the rule.

In addition to making sure all affected consumers are reimbursed, the bank must identify and fix all instances of negative credit reporting resulting from the unlawful fees, and pay a $7.5 million penalty payment to the CFPB’s Civil Penalty Fund. The CFPB indicated that Region’s violations could have justified a larger penalty, but the CFPB credited the bank for making reimbursements to consumers and promptly self-reporting to the Bureau once the issues were brought to the attention of senior management.

The consent order may be found in its entirety here.


NCUA Report. NCUA recently released its April 2015 Report. Featured articles include:

Economic Growth Expected to Continue But Uncertainty on the Horizon

Chairman’s Corner: Five New Areas of Regulatory Relief

Take Part in Financial Capability Month

Board Member McWatters’ Perspective: Reflections on GAC

Board Actions: NCUA Seeks to Eliminate Fixed-Assets Cap

Identifying and Preventing Common Recordkeeping Deficiencies

Second Half of 2015 Brings Changes to Mortgage Disclosures


March NCUA Board Meeting Video. Lastly, the video recording of NCUA’s March open meeting is now available. The March video, along with archived videos of past Board meetings, may be found on this page of NCUA’s website.