The CFPB, OCC and FDIC ("the regulators") took action on August 12, 2015 against three banks in the Citizens Bank corporate family, resulting in $11 million in required restitution and a total of $20.5 million in federal civil money penalties. The action, described in the Consent Order, is based on the unfairness and deceptiveness provisions of the CFPB's UDAAP authority.
Specifically, the regulators claimed that the way the banks processed deposits was unfair because consumers did not always receive the full amount of funds they intended to deposit. When the total deposit amount that the banks' processing system read on the deposit slip differed from the total actual amount of the deposit, an adjustment was not made unless the difference exceeded an established threshold amount—below $50 from January 2008 to September 2012 and below $25 from September 2012 to November 2013. This was true regardless of whether the amount credited to the account was higher or lower than the actual deposit, so in many cases depositers received more than the amount they deposited.
The deceptiveness charge is based on account agreement materials provided to consumers that implied that deposit amounts would be verified and that discrepancies would be caught and corrected. Notably, the Consent Order states that the banks' practices did not comply with their own policy to perform a limited review of the underlying documents when the discrepancy fell within an intermediate range below the thresholds noted above.
Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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