FDIC Fines Bank $2 Million and Requires Restitution for Violations of the Federal Trade Commission Act

The FDIC has issued a Consent Order against a Bank for the Bank’s alleged violation of the Federal Trade Commission Act.  In the Consent Order, the FDIC claims that the Bank assessed transaction fees that were greater than the fees disclosed by the Bank for point-of-sale signature-based transactions without a personal identification number.  The Bank neither admits nor denies any alleged violations of law or regulation.

The FDIC has imposed a number of penalties on the Bank for its alleged violations.  The penalties are varied, and include requiring the Bank to reimburse all consumers who were charged a transaction fee that exceeded the fee disclosed to those consumers, and requiring the Bank to establish a restitution plan within 30 days of the Consent Order’s effective date.

The Consent Order requires that the restitution plan distinguish between consumers to whom reimbursements of the excess transaction fees have already been paid, and those to whom a reimbursement is still due, including those consumers who have not yet cashed a reimbursement check that was sent to them by the Bank.

The restitution plan is also required to detail the following: (1) identification of all consumers eligible for a reimbursement; (2) the methodology used to calculate how much each consumer is owed in reimbursement; (3) the process for providing the restitution to eligible consumers; (4) the process for prior and future attempts to locate those consumers whose payments were or may be returned to the Bank or whose checks were not cashed within 30 days after the checks were mailed; and (5) the requirement for payment of consumers to whom reimbursement is due within 90 days of receipt of non-objection of the restitution plan from the FDIC Regional Director.

The Consent Order also requires that the Bank hire an independent auditor to verify the successful implementation and accuracy of the restitution plan, keep all records pertaining to the reimbursement for seven years, submit quarterly progress reports to the FDIC Regional Director, and pay a civil money penalty of $2 Million, among other things.

For more information, the FDIC Order is available here: https://www.fdic.gov/news/news/press/2018/pr18019a.pdf?source=govdelivery&utm_medium=email&utm_source=govdelivery.