Regions Bank is accused of illegally charging “tens of millions” in surprise overdraft fees — and must now pay that money back, according to the Consumer Financial Protection Bureau.
The Alabama-based bank was fined $50 million to be paid to the bureau’s victims relief fund, plus $141 million in refunds to consumers impacted by the illegal fees, officials wrote in a Sept. 28 news release.
Regions customers were charged overdraft fees on some ATM withdrawals and debit card purchases from August 2018 to July 2021, despite being told they had “sufficient funds at the time of the transactions,” the bureau said. The insufficient funds fees are tied to the bank’s profits and accounted for nearly 18% of its non-interest income in 2019, according to federal officials.
Regions leadership was reportedly aware of the surprise fees but continued to charge customers anyway, according to the release.
“Regions Bank raked in tens of millions of dollars in surprise overdraft fees every year, even after its own staff warned that the bank’s practices were illegal,” CFPB Director Rohit Chopra said in a statement. “Too often, large financial firms make a calculation that continuing to break the law is more profitable than following it.”
The bank, which operates 1,700 branches and 2,000 ATMs in more than a dozen states, faced a similar fine in 2015 after it was accused of charging overdraft fees to customers who declined to sign up for overdraft protections, the bureau said.
Regions Bank responds
Regions commented on the settlement addressing certain overdraft fees, which the bank says it “stopped charging over a year ago.”
“Although Regions Bank disagrees with the CFPB’s characterizations, the bank cooperated with the investigation and is pleased to move forward,” the bank said in a statement. “Agreeing to the settlement reflects Regions’ desire to focus its attention on continuing to support customers through a wide range of account enhancements that have already lowered fees for many customers.”
The bank said it has taken steps to discontinue a particular overdraft fee addressed in the settlement, adding that the charge affected only a “small percentage of customers.”
Additional changes have been made to further reduce overdraft and similar fees, according to bank leadership.
Read the full statement here.