The Office Thrift Supervision announced that one of its regulated entities will pay a penalty of $400,000 and refund more than $12 million to consumers who were charged allegedly excessive fees for overdraft protection on bank accounts. The OTS asserted that the institution engaged in unfair or deceptive acts or practices, conditioning credit on repayment by preauthorized electronic fund transfers, and false advertising in connection with its overdraft protection program. Copies of the civil money penalty and cease and desist order are attached.
In addition, the OTS proposed the attached guidance to its examiners and OTS-regulated institutions about overdraft practices, including procedures OTS discovered in connection with the above-action. The OTS said the proposed guidance addresses practices prohibited by the Federal Trade Commission Act for being unfair or deceptive, as well as actions that violate other federal laws or regulations. The proposal emphasizes that thrift institutions must clearly represent the features of overdraft programs; provide consumers with the opportunity to choose whether to participate; explain the thrift’s policies on clearing transactions; and place reasonable aggregate limits on overdraft fees. The proposed guidance has a 60-day comment period.
Let me know if you have any questions. Thanks.
Ralph T. Wutscher
Kahrl Wutscher LLP
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