Regulators are going to start making banks refund your overdraft fees (RF)
So the Consumer Financial Protection Bureau has decided to take more serious measures. On Tuesday, a regional bank was forced to refund fees to customers.
Regions Bank has been forced to refund $49 million in overdraft fees charged to customers and pay a $7.5 million fine.
The action against Regions Bank appears to be the first of many the feds will take to curb the fees banks can charge.
“Today the CFPB is taking its first enforcement action under the rules that protect consumers against illegal overdraft fees by their banks,” CFPB Director Richard Cordray said in a press release.
Regulators say the Alabama-based bank was forced to pay up because it did not ask some customers to opt-in as required by regulations enacted in 2010.
Regions bank took over fees earned from a high of $37.1 billion in 2009 to $31.6 billion in 2011, according to CNBC. The fees inched up to $31.8 billion last year.
Authorities have taken notice.
"The opt-in rule and overdrafts have certainly been something the bureau has been focused on," Cara Petersen, deputy director at the CFPB, told the network. "These issues will continue to be a priority for the bureau.
Despite the new rules, 52% of customers do not remember opting in to the fees, according to a recent Pew study. A further 68% said they would prefer to be declined than pay a $35 overdraft fee.
The average consumer who has opted-in pays just under $22 per month in overdraft fees, according to a CFPB research report. The charges account for 75% of total checking account fees.
Customers who have not opted in average about $3 per month in overdraft fees, the CFPB also found.
Wells Fargo has petitioned the Supreme Court to review $203 million in fines levied last year for what the government called excessive overdraft fees.
Eight other banks including JP Morgan Chase, Bank of America and Citigroup also previously paid fines for their overdraft fee practices.