Regions Bank Must Refund $141M, Pay $50M CFPB Fine for Overdraft Fees

Charging customers with surprise overdraft fees will cost Regions Bank a total of $191 million in customer redress plus a civil monetary penalty paid to the victims relief fund of the Consumer Financial Protection Bureau (CFPB).

From August 2018 through July 2021, the CFPB said, Regions Bank charged customers surprise overdraft fees on certain ATM withdrawals and debit card purchases despite telling customers they had sufficient funds, according to a CFPB press release on Wednesday (Sept. 28).

The CFPB said the bank’s leadership knew about the illegal practice for many years and opted to keep it in place until it had secured another fee-based revenue stream.

CFPB ordered Regions Bank to pay at least $141 million in refunds, plus a $50 million penalty.

See also: CFPB May Examine Banks With High Overdraft 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.”

The bank said it “disagrees with the CFPB’s characterizations” but it is moving forward with new customer enhancement and points out that the fee addressed in the settlement impacted a small percentage of customers, according to a Regions Bank press release on Wednesday (Sept. 28).

Read more: Congress Calls Bank CEOs to Capitol Hill for Consumer, Compliance Hearings

“The CFPB settlement involves one type of overdraft fee that was previously charged when there was sufficient money in an account when a debit card or ATM transaction was authorized – but not when the transaction actually posted to the account, due to other transactions,” said Regions Bank Chief Legal Officer Tara Plimpton. 

“Over a year ago, Regions stopped charging this particular overdraft fee. We took this action as part of a broader series of enhancements. These enhancements also include updating the bank’s posting order and transaction processing to give customers a clearer view of the money they have available for making purchases while avoiding fees. Regions took additional steps this year to even further reduce overdraft charges while eliminating other fees,” Plimpton added.