The Consumer Financial Protection Bureau (CFPB) announced on Wednesday that Regions Bank would owe them $191 million for surprise overdraft fees they had charged their customers. $50 million of the total will go towards the Bureau’s victim relief fund, while the other $141 million will refund the customers who were victims of the bank’s misconduct, according to the announcement.
The Alabama-based bank operates across 16 states and is estimated to possess around $160 billion in assets. Regions “offers and provides an array of financial products and services to consumers, including deposit accounts, credit cards, and lines of credit.” Overdraft fees are an integral portion of their profit model.
Regions Bank reportedly charged its customers surprise overdraft fees for nearly three years, from August 2018 to July 2021. Specifically, customers would owe these fees on certain ATM withdrawals and debit card purchases. Regions Bank would charge the overdraft fees, which financial regulators have long advised against, after telling customers that they had sufficient funds in their bank. The announcement also explains the CFPB’s finding that “Regions leadership knew about and could have discontinued its surprise overdraft fee practices years earlier, but they chose to wait while Regions pursued changes that would generate new fee revenue to make up for ending the illegal fees.”
The announcement explains that the CFPB has long observed financial institutions created obstacles for consumers to recognize and anticipate overdraft fees, calling these obstacles “unintelligible and manipulative.” Surprise overdraft fees pose a risk to consumers because fees can be racked up on what appears to be a zero-risk transaction.
CFPB Director Rohit Chopra said of the $191 million fine, “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. Too often, large financial firms make a calculation that continuing to break the law is more profitable than following it. We have more work to do to change this mentality.”
