CFPB Issues Consent Order Against Bank Over Improper Opt-Ins for Overdraft Services

The CFPB recently issued a consent order against a Virginia-based Bank alleging that the Bank violated EFTA and the CFPA by enrolling consumers in overdraft protection services and charging consumers overdraft fees without proper consent. 

The consent order alleges that the Bank offered a standard overdraft service and an opt-in overdraft service in connection with consumer checking accounts.  Which program applied to a particular transaction depended on whether that type of transaction required an opt-in under EFTA.  Customers were charged a fee for each overdraft paid above the Bank’s overdraft threshold under both the standard and opt-in overdraft programs.  

The CFPB alleges that when new customers opened accounts at a branch location, they were given an oral presentation about the opt-in overdraft service and could orally opt in, but did not receive required written disclosures until the end of the account-opening process.  This allegedly violated EFTA, which requires that consumers be provided the written disclosures before affirmatively consenting.  The CFPB also alleges that while existing customers could enroll in the opt-in overdraft program over the phone, customer service representatives were not provided with a script about the fees and features of the opt-in program to read to customers before enrolling them over the phone.  This allegedly resulted in customer service representatives failing to clearly distinguish between transactions covered by the standard overdraft program and those covered by the opt-in program.  Additionally, on some calls, customer service representatives allegedly made misleading statements to customers who opted in and left out details about fees associated with the opt-in program.  The CFPB alleges that this constituted a deceptive act or practice in violation of the CFPA.  Further, because customers were not provided with the necessary information to opt-in or affirmatively consent under EFTA, any affirmative consents received were considered improper.

Under the terms of the consent order, the Bank must pay $5 million in redress to customers and a $1.2 million civil money penalty to the CFPB. 

The Bank consented to the issuance of the consent order without admitting or denying any of its findings of facts or conclusions of law.