Case Regulatory Authority

OTS 10-018

OTS 18047

OCC 2010-202

AA-EC-10-93

OCC – 10/1/10

• Fees generated were significant portion of

bank’s revenue;

C 07-5923 WHA. (N.D. Cal.)

Decert – 5/5/09

Appeal – 11/29/10

Cross-Appeal

4/20/11

• Certain debit card transactions are at first

reflected in an available balance, but then

later deleted from the available balance,

thereby misleading customers with inflated

account balance information and inducing

them to incur overdraft fees.

• The bank commingled debit card

transactions with check and ACH

transactions for posting purposes.

• The bank also adopted a practice it referred

to as the “shadow line,” which was an

informal line of credit to support debit card

transactions. The amount of the shadow

line was individually underwritten. The bank

did not provide notice of this practice to its

customers.

FDIC-10-802K

• Marketing and implementation of overdraft

protection program.

Bank ordered to pay the US Treasury $132k.

• 
  Debit transactions posted from highest dollar amounts to lowest.
  

FDIC-11-558k

• Practices were unfair and deceptive,

Violations of Section 5 of FTC Act.

Bank ordered to reimburse affected customers.

1:09 CV 23632

(class action)

• 
  Deceptive processing of transactions.
  
• 
  Buffingtons charged more than $4k in overdraft fees.
  

1:10 CV 20476

(class action)

• 
  Breach of duty of good faith and fair dealing.
  
• 
  Unfair levying of overdraft charges.
  
• 
  Deceptively processing transactions in order to maximize overdraft fees.
  
• 
  ODP fees were “usurious.”
  

• 
  Automatic enrollment of customers in the AOP program without disclosing material facts;
  
• 
  Marketing checking and savings accounts as “free” and having low cost features while omitting material information; and
  
• 
  Suspending customers’ enrollment in the AOP program and reinstating enrollment in the program after the accounts returned to a positive balance, without disclosing the suspension or the reinstatement status of accounts to customers.
  

• 
  ATM card marketed as having “no up-front fees” (however, there were account “set up” fees and monthly service fees).
  
• 
  Free overdraft protection of $1000 per year marketed, however, there was an ODP fee of $19.95 per month for any month overdrafts incurred;
  

FDIC-12-542b

FDIC-12-543k

deceptive marketing and implementation of ODP, checking rewards, and stop-payment process for preauthorized recurring EFTs.

deceptive marketing and implementation of ODP, checking rewards, and stop-payment process for preauthorized recurring EFTs.

OCC – 7/18/12

• Misled about eligibility;

• Misinformed about cost of products; and

• Enrolled customers without consent.

• Unfair billing practices (OCC only)
Card holders will receive a refund of associated finance charges, over limit fees resulting from the products and those whose payment protection plans were denied will be paid for claims.

10/17/12

7:2010cv00021

1/5/10

• Payment protection program would cover

payments in event of short-term disability

or unemployment.

• Product terms not adequately disclosed;

• Thousands paid for plan and received no

benefit;

• Bank signed up thousands who were

ineligible for the program due to being

retired.

plan.

• Balance transfer and debit card program

deemed unfair, deceptive

• The Balance Transfer Card was marketed to

consumers with bad credit as an

opportunity to pay down old debts and

obtain credit cards.

• Lack of disclosure for consumers to make an

informed decision.

Bank failed to adequately disclose all fees

and charges assessed in connection with

product, which was marketed by a third

party.

• 
  A second over-limit fee (OL) was charged on first day of billing cycle when cardholder exceeded credit limits during prior billing cycle.
  
• 
  Cardholders contacted at places of employment for debt collection.
  
• 
  Practice of establishing minimum monthly payment so low it causes OL fees.
  
• 
  Practice of assessing late fees when payments due on Sunday/holiday and payment posted next business day.
  

FTC – 12/19/08

• 
  Credit card solicitations did not properly disclose credit limits and fees.
  
• 
  Important information disclosed on different pages, resulting in confusion.
  
• 
  Cards marketed to those with low FICO scores.
  
• 
  Amount of available credit misrepresented ($300 advertised limit; however after fees assessed, actual limit was $185).
  

Banks involved included First Bank of Delaware, First Bank & Trust of Brookings, SD and Columbus Bank & Trust Company

• Student account holders charged multiple

NSF fees from a single transaction.

• Accounts remained in overdrawn status for

long periods, allowing NSF fees to continue

accruing.

• Fees were collected from subsequent

deposits.

$11m restitution to be paid to students.

CMPs - $110k Higher One; $172k Bancorp Bank
Higher One must:

• Not charge NSF fees to accounts that have

been in a continuous negative balance for

more than 60 days.

• Not charge more than 3 NSF fees per day

on an account.

• Only one NSF fee may be charged per

transaction that is returned unpaid in any

21 day period.

• Marketing materials must be updated to

eliminate misleading representations.
Bancorp Bank must:

• Increase board oversight.

• Improve compliance management.

• Improve audit program.

• Increase oversight on third parties.

CFPB – 9/24/12

• 
  Payment protection
  
• 
  Credit score tracking
  
• 
  ID theft protection
  
• 
  Wallet protection
  

Telemarketing scripts contained misleading language likely to deceive consumers. Key terms downplayed and reps spoke quickly during the part of the call in which prices and terms of the add-on products were disclosed.

OCC

CFPB

• 
  Misrepresenting to consumers that if they entered into an agreement to settle old debt (that was no longer being reported to credit bureaus), such settlement would be reported to credit bureaus, thereby improving consumers’ credit scores.
  
• 
  Using settlement solicitations that implied that consumers who entered into settlement agreements to partially pay such debts would have the remaining balance of their debts forgiven, when in fact the balance remained a debt owed to Amex.
  
• 
  Using solicitations that misrepresented points and awards.
  

• 
  Tiered structure of the cash back payments meant that not all purchases would qualify for advertized cash back rate.
  
• 
  It was nearly impossible to earn the stated percentage of cash back reward payments.
  

Commonwealth of Massachusetts

6/9/09

• UDAP

borrower inability to make scheduled

payments.

• Unfair for lender to make high-priced loan,

reap rewards of high fees and points, then

enjoy benefits of foreclosure.

Bank must provide AG with 90 days advance notice of any foreclosure action. Foreclosure process substantively changed in Massachusetts as a result of this action.

Although Reg Z provides that creditors may reduce/suspend HELOCs when the value of the borrower’s home is significantly less than the appraisal value, the commentary to Reg. Z states that what constitutes a “significant decline” depends upon individual circumstances.

and partially in favor of bank. However, plaintiffs given permission to file new class action suit.

Case No. 12-cv-03897-YGR

06/07/13

bring a claim forward.

• UDAP

• Lenders criticized for not taking action to

prevent foreclosures.

• Inadequate handling of consumer

complaints and requests for information.

• Inadequate customer service

• Unreasonable or unwarranted fees

• Misrepresenting terms of loan

modifications

• Misrepresenting that a borrower qualifies

for a loan modification.

Mortgage Servicers

HUD – 9/4/07

• 5 year prohibition on marketing optional

products (e.g. home warranties).

• Refunds of optional product fees to

borrowers.

• Full disclosure of attorney or payoff fees

required in connection with foreclosures.

Reimbursement of fees charged that were

not actually performed.

• Monthly mortgage statements did not

include important information about loans.

• Payments applied to fees first, then P&I.

• 
  Robo-signing
  
• 
  Dual-track processing (modification and
  

• 
  Poor customer service
  
• 
  Overall servicing misconduct
  

Reforms:

• 
  Foreclosure affidavits must be based on personal knowledge.
  
• 
  Standing to foreclose must be documented and disclosed to borrowers.
  
• 
  Pre-foreclosure notice must be sent to borrowers.
  
• 
  Borrowers must be evaluated for loss mitigation options before foreclosure referral.
  
• 
  Procedures required re default fees, accuracy of account information, including audits of accounts and monthly billing.
  
• 
  Procedures required to ensure oversight of foreclosure vendors.
  
• 
  SCRA – enhanced protections.
  

• 
  Ally/GMAC
  
• 
  Bank of America
  
• 
  Citi
  
• 
  JP Morgan Chase
  
• 
  Wells Fargo
  

• 
  Confusing interest rate structure;
  
• 
  High points and fees;
  
• 
  Large number of “discount points” that resulted in thousands of dollars added to principal;
  
• 
  Duplicative costs charged during refinances; and
  
• 
  Unjustified repayment penalties
  

• Caused substantial economic injury when

the liens were not released upon full

repayment;

• Practice not outweighed by benefits to

Capital City;

• Consumers could not reasonable avoid the

practice.

10-10670-MBB

2001 WL 99016

Mass.

2011

Borrowers alleged that BAC violated Mass. Gen. L. c. 93A, the Consumer Protection Act, by failing to comply with federal regulations relating to the Home Affordable Modification Program (“HAMP”).

FDIC-10-216k

May 2013

FDIC-13-049k