Regions Financial will pay out $191 million as part of a settlement with the Consumer Financial Protection Bureau tied to an overdraft fee the Birmingham, Ala. company stopped charging in 2021.
The $161 billion-asset company said in a press release that it will pay a $50 million civil monetary penalty and provide roughly $141 million of customer redress. The settlement will be reflected in Regions’ third-quarter results.
Regions said that, although it disagreed with the CFPB’s characterizations, it cooperated and “is pleased to move forward.”
The 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,” Tara Plimpton, Regions’ chief legal officer, said in a press release.
“Over a year ago, Regions stopped charging this particular overdraft fee,” Plimpton added. “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 said it took more steps this year to further reduce overdraft charges and eliminate other fees.
The CFPB, in its press release, characterized the charges as “surprise” fees.
Regions “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 the agency’s release.
“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,” Chopra added.