Regulation

Santander Gets Hit With Fine Due To Overdraft Practices

Santander Bank has gotten hit with a $10 million fine by the Consumer Financial Protection Bureau, which contended on Thursday (July 14) that the bank engaged in illegal overdraft service practices.

“Santander tricked consumers into signing up for an overdraft service they didn’t want and charged them fees,” said CFPB Director Richard Cordray in announcing the fine. “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.”

According to the CFPB, the telemarketing vendor Santander contracted with deceptively marketed the overdraft service to consumers and signed them up without getting their consent. The CFPB said that, from 2010 to 2014, Santander was marketing and enrolling consumers in its “Account Protector” service designed to protect customers from overdrawing on their accounts at ATMS and on one-time debit card transactions. Customers were charged $35 per overdraft. Customers were reportedly persuaded into the service by telemarketers who were paid a higher hourly rate once he or she met specific sales targets.

Santander is a national bank based in Wilmington, Delaware, and operates a network of close to 700 retail branch offices in Connecticut, Delaware, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania and Rhode Island. Some of the practices the CFPB allege Santander engaged in include signing consumers up for overdraft services without their consent, letting consumers believe the overdraft services were free and deceiving consumers about the fees they would incur if they did not opt into the overdraft protection program. What’s more, telemarketers falsely claimed they weren’t making a sales pitch on the call and that Santander failed to stop the deceptive practices on the part of telemarketers.

Under the order by the CFPB, Santander is required to validate all opt-ins to the program associated with a telemarketer, no longer use a vendor to telemarket its overdraft service and increase the oversight of all third-party telemarketers it uses. That’s in addition to the $10 million penalty imposed by the CFPB.

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