The Consumer Financial Protection Bureau has taken an enforcement action to force Santander Bank to stop enrolling customers in overdraft protection without their informed consent. The bank has also been ordered pay a $10 million fine.
Santander, which has nearly 700 branches in 8 northeastern states, sold high-cost overdraft protection through a telemarketing contractor that enrolled some customers without their consent and lied to other customers about its cost.
The CFPB also found that the telemarketer’s employees were incentivized to cut corners by unrealistic sales quotas. Employees were fired or had their hours reduced when they failed to hit a specific sales target, a practice that encouraged the illegal behavior. As the Committee for Better Banks, the National Employment Law Project, and AFR have previously documented, sales quotas create widespread risks for consumers in the banking industry. Recognizing the problem with these employment practices, the CFPB’s order bars Santander from using outside telemarketers or imposing sales quotas on its employees to sell its overdraft products.
Santander is not the only bank to use high overdraft fees as a profit center. Banks charge billions in overdraft fees per year, costing the average consumer who pays an overdraft fee $225 per year.