CFPB Keeps its Sights on Fees in Latest Enforcement Action

On December 7, the Consumer Financial Protection Bureau (“CFPB”) announced that it was taking action against Atlantic Union Bank over practices the CFPB says misled consumers into enrolling in overdraft services without the proper disclosures. The end result of the action is a $1.2 million penalty owed by Atlantic Union to the CFPB and an additional $5 million in fees Atlantic Union is required to disgorge to impacted consumers.

At issue in the enforcement action is the assessment of overdraft fees without first obtaining proper consent. Specifically, the CFPB alleges that Atlantic Union employees obtained consumer consent to opt-into overdraft for checking accounts orally, either at bank branches or via the telephone, without first providing the disclosures required under Regulation E for opt-in overdraft programs. As a result, Atlantic Union consumers, according to the CFPB, did not understand which account transactions would be covered by the service and what terms and conditions applied.

The enforcement action is a good reminder that financial institutions should treat all opt-in overdraft programs as a key area of potential risk that requires heightened and ongoing monitoring and training. At a minimum, financial institutions should train and regularly monitor the performance of their customer service representatives to ensure any disclosures and descriptions of the financial institution’s overdraft service accurate and not misleading in any way and that they otherwise meet the disclosure requirements under Regulation E for opt-in overdraft. Failing to ensure such measures are being taken can expose the financial institution, as it did Atlantic Union, to millions in losses from fines and penalties.

A copy of the CFPB’s Enforcement Action is available here: https://files.consumerfinance.gov/f/documents/cfpb_atlantic-union-bank_consent-order_2023-12.pdf

The CFPB’s Press Release Announcing the Enforcement Action is available here: https://www.consumerfinance.gov/about-us/newsroom/cfpb-orders-atlantic-union-bank-to-pay-6-2-million-for-illegal-overdraft-fee-harvesting/