Santander Bank Fined $10 Million for Illegal Overdraft Practices

santander-bankThe Consumer Financial Protection Bureau (CFPB) ordered Santander Bank, N.A. to pay a $10 million fine for illegal marketing of overdraft services and using a telemarketing firm that signed some bank customers for the overdraft service without their consent.

consumer financial protection bureauAccording to CFPB Director Richard Cordray “Santander tricked consumers into signing up for an overdraft service they didn’t want and charged them fees.  Santander’s telemarketer used deceptive sales pitches to mislead customers into enrolling in overdraft service. We will put a stop to any such unlawful practices that harm consumers.

Why are these actions illegal?

Since 2010, federal rules have prohibited banks and credit unions from charging overdraft fees on ATM and one-time debit card transactions unless consumers specifically agreed. If consumers don’t agree, the banks may decline the transactions because of insufficient or unavailable funds, and cannot charge an overdraft fee.

The Bureau found Santander Bank’s illegal and improper practices included:

  • Signing consumers up for overdraft service without their consent.
  • Deceiving consumers that overdraft service was free.
  • Deceiving  consumers about the fees they would face if they did not opt in.
  • Falsely claiming the call was not a sales pitch.
  • Failing to stop its telemarketer’s deceptive tactics.

Enforcement Action – So what has CFPB ordered Santander Bank to do?

  • Validate all opt-ins associated with the telemarketer.
  • Not use a vendor to telemarket overdraft service.
  • Increase oversight of all third-party telemarketers.
  • Pay a $10 million penalty.

The full text of the CFPB’s consent order: http://files.consumerfinance.gov/f/documents/20160714_cfpb_Consent_Order.pdf


The purpose of the Consumer Financial Protection Bureau.  The CFPB is “a 21st century agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives.”  For more information, visit consumerfinance.gov.

Youtube from CFPB: https://www.youtube.com/watch?v=BHMUVfjffhA&feature=youtu.be

About the Author:
Diane Drain
Diane L. Drain is a well known and respected Arizona bankruptcy attorney. She is an expert in both consumer bankruptcy and real estate laws. Since 1985 she has been a dedicated advocate for her clients and spokesperson for Arizona citizens. Diane is a professor of law and has taught bankruptcy for more than 20 years. As a teacher she believes in offering everyone, not just her clients, advice about the Arizona bankruptcy laws. She is also a mentor to hundreds of Arizona attorneys.Read More →

Connect with Diane on google+ *This article is available for educational purposes only and does not provide specific legal advice. By using this information, you understand that there is no attorney client relationship between you and me, and that this information should not be used as a substitute for competent legal advice from an attorney familiar with your personal circumstances and licensed to practice law in your state.*