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Santander Bank to Pay US$10 Million Fine for Illegal Overdraft Practices

The Consumer Financial Protection Bureau (CFPB) has ordered Santander Bank to pay a US$10 million fine for illegal overdraft service practices. Santander’s telemarketing vendor deceptively marketed the overdraft service and signed certain bank customers up for the service without their consent. In addition to paying the civil money penalty to the CFPB, Santander Bank must go back and give consumers the opportunity to provide their affirmative consent to overdraft service, not use a vendor to telemarket its overdraft service, and it must increase oversight of vendors it uses to telemarket consumer financial products or services.

Santander offers overdraft service with its checking accounts. An overdraft can occur when consumers spend or withdraw more money from their checking accounts than is available. From 2010 to 2014, Santander marketed and enrolled consumers in its “Account Protector” overdraft service for ATM and one-time debit card transactions, and charged consumers US$35 per overdraft. Santander used a telemarketer to call consumers to persuade them to opt in to the overdraft service and rewarded the telemarketer with a higher hourly rate when it hit specified sales targets. Santander's US$10 million fine was higher than the US$7.5 million fine the CFPB levied last year against Regions Financial for allegedly charging illegal overdraft fees.

News Characteristics

Date : Jul 14, 2016
Region : North America
Industry : Banks
Function : Risk Management
Sub-Function : Fraud Management