CFPB Reaches $3.7 Billion Settlement With National Bank to Resolve Alleged UDAAP Violations

On December 20, 2022, the Consumer Financial Protection Bureau (CFPB) announced that it had entered into a consent order with a large national bank to resolve alleged violations of the Consumer Financial Protection Act’s (CFPA) prohibition of unfair, deceptive, and abusive acts or practices, 12 U.S.C. §§ 5531 and 5536.

According to the CFPB, the bank allegedly engaged in unlawful conduct across a host of product lines.  With respect to the bank’s automobile loan products, the Bureau alleged that the bank incorrectly applied borrowers’ payments, charged improper fees and interest, and illegally repossessed borrowers’ vehicles.  As to mortgage loan products, CFPB alleged the bank improperly denied loan modification applications and charged incorrect fees to borrowers.  The Bureau also alleged that the bank illegally charged deposit account customers with surprise overdraft fees and unlawfully froze their deposit accounts using a faulty automated fraud detection system.

As part of the consent order, the bank must pay more than $2 billion in redress to consumers and a record-breaking $1.7 billion civil penalty to the CFPB.  Additionally, the bank must develop a redress plan to remediate harmed customers and engage in compliance monitoring.  In agreeing to the consent order, the bank neither admits nor denies the Bureau’s allegations.