We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Regions Financial (RF) to Pay $191M for Illegal Overdraft Fees
Read MoreHide Full Article
Regions Financial Corp (RF - Free Report) has been asked by the U.S. Consumer Financial Protection Bureau (“CFPB”) to pay $191 million in redressal and fines for levying illegal overdraft fees on customer accounts from 2018 to 2021.
While the bank does not charge these fees anymore, it will have to pay a $50-million civil monetary penalty and refund customers around $141 million charged earlier. The financial impacts of the settlement will be reflected in RF’s third-quarter 2022 results.
Management noted, “The CFPB settlement involves one type of overdraft fee that was previously charged when there was sufficient money in an account when a debit card or ATM transaction was authorized – but not when the transaction actually posted to the account, due to other transactions.”
In 2019, Regions Financial initiated modifications in its overdraft process to offer customers effective tools for managing their daily cash flow and avoiding various fees. Also, this year, the company eliminated overdraft protection transfer fees and non-sufficient fund (NSF) fees.
The company reduced caps on overdraft fees, launched an early direct deposit feature, making consumers’ paychecks available up to two days early, and introduced a low-cost line of credit to help customers meet short-term financial needs. The changes led to lower fees, declines in fee-related revenues and benefited consumers.
Nonetheless, Regions Financial is focused on expanding and diversifying its business operations on the back of investments in varied product offerings and inorganic activities. In December 2021, the company closed the acquisition of Clearsight to leverage the latter’s extensive technology sector knowledge in the M&A advisory services space. As the company is committed to diversifying its revenue streams and meeting customer needs via diverse services, we believe that such endeavors will support its growth prospects in the long term.
Over the past year, shares of RF have lost 8.6% compared with the 8.3% decline recorded by the industry.
Of late, banks have been facing increased scrutiny from regulators and lawmakers for charging overdraft and other fees to consumers. Several U.S. consumer banks have been asked to eliminate all consumer overdraft fees to safeguard customers. Amid this, banks like The PNC Financial Services Group, Inc. (PNC - Free Report) and BOK Financial (BOKF - Free Report) have been undertaking actions to align with such requests.
Earlier this month, BOKF announced that it would eliminate all NSF fees and reduce overdraft fees by the end of 2022. By the end of the year, BOKF will reduce the maximum number of overdraft fees charged per day from five to three and increase the overdraft cushion to $50 from $5.
As part of its efforts to enhance the financial well-being of its customers, PNC announced that it would no longer charge its consumer deposit account customers NSF fees.
Notably, PNC has been one of the first financial institutions to take a major step in addressing overdraft fees. In April 2021, the company launched Low Cash Mode, a cornerstone feature of its Virtual Wallet Spend account, which provides consumers with real options for avoiding overdrafts, while maintaining overdraft availability for those who need to make payments during temporary cash shortfalls.
See More Zacks Research for These Tickers
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
Regions Financial (RF) to Pay $191M for Illegal Overdraft Fees
Regions Financial Corp (RF - Free Report) has been asked by the U.S. Consumer Financial Protection Bureau (“CFPB”) to pay $191 million in redressal and fines for levying illegal overdraft fees on customer accounts from 2018 to 2021.
While the bank does not charge these fees anymore, it will have to pay a $50-million civil monetary penalty and refund customers around $141 million charged earlier. The financial impacts of the settlement will be reflected in RF’s third-quarter 2022 results.
Management noted, “The CFPB settlement involves one type of overdraft fee that was previously charged when there was sufficient money in an account when a debit card or ATM transaction was authorized – but not when the transaction actually posted to the account, due to other transactions.”
In 2019, Regions Financial initiated modifications in its overdraft process to offer customers effective tools for managing their daily cash flow and avoiding various fees. Also, this year, the company eliminated overdraft protection transfer fees and non-sufficient fund (NSF) fees.
The company reduced caps on overdraft fees, launched an early direct deposit feature, making consumers’ paychecks available up to two days early, and introduced a low-cost line of credit to help customers meet short-term financial needs. The changes led to lower fees, declines in fee-related revenues and benefited consumers.
Nonetheless, Regions Financial is focused on expanding and diversifying its business operations on the back of investments in varied product offerings and inorganic activities. In December 2021, the company closed the acquisition of Clearsight to leverage the latter’s extensive technology sector knowledge in the M&A advisory services space. As the company is committed to diversifying its revenue streams and meeting customer needs via diverse services, we believe that such endeavors will support its growth prospects in the long term.
Over the past year, shares of RF have lost 8.6% compared with the 8.3% decline recorded by the industry.
Image Source: Zacks Investment Research
Currently, RF carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Banks Removing Overdraft Fees
Of late, banks have been facing increased scrutiny from regulators and lawmakers for charging overdraft and other fees to consumers. Several U.S. consumer banks have been asked to eliminate all consumer overdraft fees to safeguard customers. Amid this, banks like The PNC Financial Services Group, Inc. (PNC - Free Report) and BOK Financial (BOKF - Free Report) have been undertaking actions to align with such requests.
Earlier this month, BOKF announced that it would eliminate all NSF fees and reduce overdraft fees by the end of 2022. By the end of the year, BOKF will reduce the maximum number of overdraft fees charged per day from five to three and increase the overdraft cushion to $50 from $5.
As part of its efforts to enhance the financial well-being of its customers, PNC announced that it would no longer charge its consumer deposit account customers NSF fees.
Notably, PNC has been one of the first financial institutions to take a major step in addressing overdraft fees. In April 2021, the company launched Low Cash Mode, a cornerstone feature of its Virtual Wallet Spend account, which provides consumers with real options for avoiding overdrafts, while maintaining overdraft availability for those who need to make payments during temporary cash shortfalls.