Saturday, July 16, 2016

Santander Bank fined $10m for deceptive marketing techniques

By Deirdre Fernandes, Boston Globe Staff July 14, 2016

Santander Bank, the state’s third-largest lender, will pay a $10 million fine for deceptively marketing overdraft protection on debit cards, a service that potentially cost customers hundreds of dollars in fees each year.

The bank violated new consumer protection rules adopted after the financial crisis by hiring a telemarketer that used misleading tactics to sell overdraft services, a lucrative source of revenue, the federal Consumer Financial Protection Bureau said Thursday. But from 2010 to 2014, the telemarketer enrolled customers in the program without their consent and provided them with false information about fees, the regulator said in a complaint.

Santander Bank, headquartered in Boston, is a subsidiary of the Spanish financial giant Banco Santander S.A.

“Santander tricked consumers into signing up for an overdraft service,” Richard Cordray, director of the agency, said in a statement. “We will put a stop to any such unlawful practices that harm consumers.”

Since 2010, banks and credit unions have been prohibited from charging overdraft fees unless consumers agree to opt-in to the service. With overdraft protection, banks will pay a bill if a consumer’s account is short, but also charge fees for the service. If consumers don’t opt-in, the bank can decline the transactions due to insufficient funds.


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