WASHINGTON (10/10/14)--M&T Bank will pay $3.1 million after the Consumer Financial Protection Bureau (CFPB) found it was deceptively advertising free checking accounts. M&T will provide $2.9 million in refunds to the approximately 59,000 consumers deceived into paying fees and it will pay a $200,000 penalty for the violations.
According to the bureau, it found M&T lured in consumers with promises of "no strings attached" free checking, without disclosing key eligibility requirements. When consumers failed to meet the requirements, M&T automatically switched them to checking accounts with fees.
During a routine CFPB supervision exam, the CFPB found that Buffalo, N.Y.-based M&T was advertising a "Free Checking" account, then converting many consumers into a fee-based "M&T First" account if there was no account activity for 90 days.
The CFPB claims that M&T did not notify consumers about this change, the only indication was a change to M&T First from Free Checking on account documents. Consumers with M&T First accounts who failed to maintain an average or combined monthly balance of $1,500 were charged fees of $5 to $14 per month.
"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," reads a statement released by the CFPB announcing the action.
The CFPB order states that M&T converted approximately 80,000 Free Checking accounts to M&T First accounts. Of those, about 59,000 were charged approximately $2.9 million in monthly maintenance fees because they did not meet the $1,500 threshold required in the M&T First accounts.
M&T assessed approximately $2.9 million in monthly maintenance fees from these consumers.
Use the resource link below to access the full consent order.