M&T Bank Ordered to Pay $2.9 Million for Deceptively Marketing Free Checking Accounts
M&T Bank will pay $2.9 million in refunds to 59,000 customers that were lured into free checking accounts only to end up paying monthly maintenance fees.
In its complaint, the Consumer Financial Production Bureau (CFPB) alleges that the bank advertised free checking accounts, but switched customers to accounts with maintenance fees when they didn't meet certain requirements.
In order to keep their free checking account, customers were required maintain a minimum level of account activity with deposits and withdrawals. If there was no account activity for 90 days, M&T automatically switched customers over to another type of account. This account required a monthly minimum balance of $1,500 or customers would be charged between $5 and $14 per month. The bank also neglected to inform customers that their accounts were changing and that they'd be responsible for monthly fees.
M&T Bank converted about 80,000 free checking accounts to those with fees attached. About 59,000 customers were charged fees because they didn't meet the minimum requirement. M&T assessed about $2.9 million in fees, which will be refunded.
M&T will also pay a $200,000 civil penalty, end its deceptive advertising and update credit reports for customers who had their accounts closed due to a negative balance.
The consent order can be found here.