In October, the Consumer Financial Protection Bureau (CFBP) took action against M&T Bank for misleading advertisements of free checking accounts. The Bureau found that M&T had acted unethically by failing to inform customers of integral account qualifications while enticing them with promises of free "no strings attached" checking.
In actuality, the accounts were free as long as customers fulfilled the requirements for a minimum level of account activity. If these requirements were not satisfied, the account was automatically switched to a checking account with fees with no warning other than a minor wording modification on the monthly statement. While the customers who opened the free accounts were given a contract explaining the stipulation of the free account, the CFPB still felt the ads were misleading.
Because of the account conversions, over $2 million in fees were collected. M&T has been ordered by the Bureau to refund this money to the deceived customers, and to pay an additional $200,000 in fines.
M&T Consent Order and Enforcement Action
The Buffalo, New York-based M&T Bank is a retail institution that provides various deposit account services from hundreds of locations in the northeastern United States. Because of the CFPB's supervisory examinations, it was discovered that M&T was advertising "Free Checking" to customers then switching them to the fee-based "M&T First" accounts when they failed to meet certain account requirements.
It is important to note that the regulatory action did not stem from the actual checking account, but rather the deceptive fashion in which it was advertised. The CFPB did not take issue with the free checking account requirements or the account conversion. However, they did find that a failure to properly alert customers of the requirements and conversion process sufficiently established deceptive acts and practices under financial regulatory codes.
The CFPB has the authority under the Dodd-Frank Wall Street Reform and Consumer Protection Act to enforce disciplinary actions against any institution that engages in unfair, deceptive, or abusive acts or practices. M&T is not the first financial organization to come under fire for such consumer financial law violations.
In the past Bank of America was found to have engaged in deceptive credit practices and ordered to repay $727 million to customers. Chase Bank, Citibank, and JP Morgan were all discovered to have rigged foreign exchange markets. And Citigroup was ordered to repay $7 million after the U.S. government accused it of misleading investors about the quality of mortgage securities.
Consumer Protection Lawyers
If you, a friend or family member has been a victim of unfair bank overdraft fees, contact the national consumer protection lawyers at Golomb Spirt Grunfeld today at 1-800-355-3300 or 1-215-985-9177 or fill out our confidential Contact Form. We have successfully fought credit card companies, banks, and financial institutions and protected consumer rights for decades. Call us today to review your case.
The national consumer protection lawyers at Golomb Spirt Grunfeld have successfully represented individuals in Philadelphia, Pennsylvania, New Jersey, and throughout the United States.