Regions Bank will pay $50m into the CFPB’s victims relief fund. Credit: succo from Pixabay.

US Consumer Financial Protection Bureau (CFPB) has ordered Regions Bank to pay $50m as civil monetary penalty for charging illegal overdraft fees. 

The consumer watchdog has also ordered the bank to refund at least $141m to customers harmed by its action.

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In a statement, the CFPB said that from August 2018 through July 2021 the bank charged customers surprise overdraft fees on certain ATM withdrawals and debit card transactions. 

Customers were charged overdraft fees even after Regions Bank informed them that they had sufficient funds at the time of the transactions, it added. 

Additionally, the regulator claimed that the bank’s leadership was aware of the practice and could have stopped it, but they continued the practice until the bank found a new source of revenue to make up for illegal overdraft fees.

CFPB director Rohit Chopra said: “Regions Bank raked in tens of millions of dollars in surprise overdraft fees every year, even after its own staff warned that the bank’s practices were illegal.

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“Too often, large financial firms make a calculation that continuing to break the law is more profitable than following it. We have more work to do to change this mentality.”

Responding to the fine, the bank said it disagrees with the regulator’s characterisations. 

Regions Bank chief legal officer Tara Plimpton said: “The CFPB settlement involves one type of overdraft fee that was previously charged when there was sufficient money in an account when a debit card or ATM transaction was authorised – but not when the transaction actually posted to the account, due to other transactions.”

As part of a broader series of enhancements, the bank stopped charging this particular overdraft fee a year ago.