Bank to Pay $191 Million in OD Fee Consent Order with CFPB

A large bank recently entered into a Consent Order with the CFPB, agreeing to pay a $50 million penalty and $141 million in consumer refunds, for allegedly improper overdraft fees.  The CFPB found the bank had committed unfair and abusive acts and practices by charging overdraft fees on transactions where there was a sufficient balance at the time the Bank issued an authorized for transaction, but where the transaction was ultimately presented for settlement when the accountholder had an insufficient balance (so-called “authorized-positive” overdraft fees).  This is common in connection with signature-based debit card transactions.

This was the bank’s second overdraft fee-related enforcement action from the CFPB.  The CFPB found that in this case, the overdrafts at issue were “not reasonably avoidable because they were caused by counter-intuitive, complex processes that consumers did not understand or control and were contrary to consumers’ reasonable expectations.”

This order represents the CFPB’s continued focus on overdraft fees.  See WBK’s prior coverage of the CFPB and overdraft fees here, here, and here.  Other state and federal regulators are also focusing on particular overdraft fee scenarios that they consider to present risk of consumer harm, including the New York Department of Financial Services and the FDIC.