The Consumer Financial Protection Bureau (CFPB) is once again doing regulation via enforcement action. This time, the CFPB is cracking down on financial institutions that are deceptively advertising free checking accounts.
CFPB Director Richard Cordray commenting on an October 9 enforcement order against M&T Bank stated that banks and credit unions "cannot misstate to consumers whether a financial product or service is free."
The CFPB wrote that consumers were lured by M&T Bank with promises of “no strings attached” free checking, but the bank failed to disclose key eligibility requirements for the account.
The CFPB noted: "None of the advertisements for Free Checking disclosed either the minimum activity requirement or the automatic conversion of a Free Checking account ... after 90 days of inactivity."
The CFPB press release stated that banks and credit unions are prohibited from deceptively advertising deposit accounts. If an account is described as free or no cost, it cannot, for example, have any maintenance or activity fees, or any fees to deposit, withdraw, or transfer money.
According to the CFPB, the failure to disclose these eligibility requirements is a deceptive act or practice.
Read the press release. Read the consent order.
Again, credit unions are brought in as collateral damage when a bank makes a mistake. M&T Bank follows in the footsteps of Chase, US Bank and Riggs Bank just to name a few of the banks that caused legal changes to impose more regulatory burdens on credit unions.
ReplyDeleteIf a credit union is doing this, the credit union is not collateral damage.
ReplyDeleteNo but the Truth In Savings Act, Financial Privacy and increased AML focus was brought on by banks, not credit unions.
ReplyDeleteRight. All credit unions are saints and all banks are bad. Good grief.
ReplyDeleteThat was not the basis of my comment. But let us look at the facts. Please tell me the last time banks had to deal with changes in law because credit unions did wrong to consumers.
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