Richmond, Virginia-based Atlantic Union Bank agreed to pay $6.2 million for allegedly illegally enrolling thousands of checking account holders into overdraft programs, the Consumer Financial Protection Bureau said Thursday.
The CFPB alleged that Atlantic Union misled consumers who enrolled in its Opt-In Overdraft Privilege service by phone and neglected to provide them with proper disclosures, as required by the Electronic Fund Transfer Act, from 2017 and 2020.
At least $5 million in illegal overdraft fees will be refunded to affected customers. A $1.2 million penalty will be paid into the CFPB’s victims relief fund.
“Atlantic Union Bank harvested millions of dollars in overdraft fees through a host of illegal practices,” said CFPB Director Rohit Chopra in a prepared statement. “Americans are fed up with junk fee scams and the CFPB will continue its work to ensure families are treated fairly.”
As part of the settlement, the bank did not admit to any wrongdoing.
“We respectfully disagree with the CFPB’s conclusions about these historical practices and take very seriously our obligation to comply with applicable law,” CEO John Asbury said in a prepared statement. “We are, and have always been, committed to treating our customers fairly and providing them with the information they need to help them make financial decisions that work for their lives.”
“Nonetheless, we believe it is in Atlantic Union’s best interest to settle this matter so we can continue focusing on providing the products, services, and support our customers want,” he said.
Atlantic Union employees didn’t clearly explain to customers who had enrolled in overdraft coverage by phone, which transactions were covered by the overdraft service, and they made other misleading statements about their terms and conditions, the CFPB found in an investigation.
In some calls, the CFPB investigation found that Atlantic Union employees 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.”
Atlantic Union said it “made improvements” to its overdraft program prior to Thursday’s settlement, including to the Opt-In Overdraft Privilege service at the center of the CFPB settlement.
Last year, the bank also reduced or got rid of certain overdraft-related fees, on-trend with the industry as a whole. Atlantic Union eliminated insufficient funds, or NSF, fees on consumer accounts; and lowered the number of overdraft fees that can be charged to an account per day. It also introduced a no-overdraft checking product.
The CFPB has been vocal and active in its opposition to banks’ implementation of overdraft fees, which it loops in to the broader category of “junk fees.” The watchdog announced in October that CFPB examinations have resulted in the return of $120 million comprised of surprise overdraft fees and NSF fees.
