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Friday, October 10, 2014

CFPB Enforcement Action Targets ‘Free’ Checking

The CFPB ordered a New York bank to refund $2.9 million to 59,000 checking customers. The bureau argued that the bank deceptively collected fees from accounts that had been billed as free checking.

The CFPB said that the bank inadequately disclosed the terms required to maintain no-fee account status, such as minimum activity levels or a minimum monthly balance. When accounts had not been active for 90 days, the bureau said, the bank charged monthly fees ranging from $5 to $14.

The bureau cited advertisements that included the phrases “no strings attached,” “free yourself from monthly service fees” and “totally free checking” without mentioning a required minimum activity level. The bank, which did not admit wrongdoing, will also pay a $200,000 fine to the CFPB.

Read the order.

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