Surprise! Regions Bank Fined for Bilking Millions from Customers in Overdraft Fee Scheme
Imagine the surprise of checking your bank balance and believing you have sufficient funds to cover a transaction, proceeding with the purchase, and then being hit with a $35 overdraft fee charge.
That’s exactly what happened to thousands of customers of Regions Bank.
According to the Consumer Financial Protection Bureau (CFPB) the surprise overdraft fees were part of a deliberate scheme by Regions to maximize overdraft charges paid by customers.
Here’s more from NewsBreak:
The Consumer Financial Protection Bureau (CFPB) has ordered Regions Bank to pay $191 million in refunds and penalties as a result of an illegal surprise overdraft fee scheme it foisted on customers.
From August 2018 through July 2021, Regions charged customers surprise overdraft fees on certain ATM withdrawals and debit card purchases. The bank charged overdraft fees even after telling consumers they had sufficient funds at the time of the transactions. Financial regulators have long cautioned banks against charging this type of overdraft fee. The CFPB also found 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.
“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,” said CFPB Director Rohit Chopra. “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.”
While Regions is among the banks changing their overdraft fee policy to be more customer friendly, the bank still allows up to three overdraft fee charges per day. In short, while some banks are eliminating overdraft fees altogether (either by declining the transaction OR by offering a 24-hour grace period), Regions still envisions overdraft fees as a key source of revenue.
On a positive note, Regions now no longer charges NSF fees — or fees for returned items.
Want more consumer finance news? Check out my newsletter!