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Atlantic Union Bank to Pay $6.2M for Overdraft Fee Harvesting

The Consumer Financial Protection Bureau (CFPB) has taken action against Atlantic Union Bank for illegally enrolling thousands of customers in checking account overdraft programs.

The CFPB found that Atlantic Union misled consumers who enrolled in this overdraft service by phone and failed to provide proper disclosures. The CFPB is ordering Atlantic Union to refund at least $5 million in illegal overdraft fees and pay a $1.2 million penalty to the CFPB’s victims relief fund.

The Electronic Fund Transfer Act and its implementing regulation require banks — and credit unions — to  describe their overdraft service in writing before getting a consumer to opt-in to overdraft coverage for ATM withdrawals and one-time debit card transactions.

The CFPB’s order describes the bank’s illegal conduct and how it improperly communicated with and enrolled consumers in its overdraft program. Specifically, the bank violated federal law by:

  • Charging fees without proper consent: At Atlantic Union Bank branches, employees gave oral descriptions of the bank’s overdraft coverage to new customers who opened checking accounts. Employees sought oral confirmation from customers to enroll in overdraft coverage before providing them with the required written disclosures describing the terms of service.
  • Misleading customers about the terms and costs of overdraft coverage: For customers who enrolled in overdraft coverage by phone, Atlantic Union Bank employees did not clearly explain which transactions were covered by the service, and made other misleading statements about the terms and conditions of the service. In some calls, bank employees also omitted key information about the cost of the service and the fact that consumers could incur a hefty overdraft fee for each transaction covered by the service.

Enforcement Action
Under the Consumer Financial Protection Act (CFPA), the CFPB has the authority to take action against institutions violating consumer financial laws, including engaging in unfair, deceptive, or abusive acts or practices. The CFPB found Atlantic Union Bank violated the Electronic Fund Transfer Act’s opt-in requirements for overdraft services, and it found the bank engaged in deceptive acts or practices in violation of the CFPA.

The order requires Atlantic Union to end its unlawful practices and:

  • Refund $5 million to thousands of consumers: The bank must pay at least $5 million in redress to thousands of affected consumers illegally charged overdraft fees.
  • Pay a $1.2 million fine: Atlantic Union will pay a $1.2 million penalty to the CFPB’s victims relief fund.

View the CFPB order here.

Access the ‘Compliance Hotline’
Your League-member benefits include the Compliance Hotline — providing exclusive access to dedicated compliance experts:

Using the above phone number and email address, you can gain access to a knowledgeable team that’s ready to address all your credit union’s compliance inquiries — promptly and efficiently. With the Compliance Hotline, you can proactively respond to impromptu questions and issues by getting clarity and insight on technical topics that normally slow you down. We want to help you unlock the full potential of your League membership by leveraging the resources and support you need to navigate the complex world of compliance effortlessly. We’re ALWAYS just a phone call or email away!

Additionally, other League-member compliance resources include:

  • ViClarity
  • CU PolicyPro
  • ComplySight
  • InfoSight
  • CU Store
  • Record Retention Guide
  • GRC Technology Solutions

For more information, email Lisa Quaranta.

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