In overcharging consumers for prepaid cards, DE bank will pay $3.3 million in penalties, restitution

Nearly a quarter-million consumers who were assessed inflated transaction fees by a Delaware bank will be paid about $1.3 million in restitution under a settlement announced by the federal deposit insurer Wednesday.

The bank was also assessed a $2 million penalty relating to unfair and deceptive practices.

In a settlement with The Bancorp Bank of Wilmington, Del., the Federal Deposit Insurance Corp. (FDIC) said that, as part of the agreement, the bank stipulated to the issuance of an Order for Restitution and Order to Pay Civil Money Penalty. The restitution order, FDIC said, requires the bank to prepare a comprehensive restitution plan and to pay restitution of nearly $1.3 million to approximately 243,000 harmed consumers who were assessed transaction fees exceeding what the bank disclosed.

FDIC said consumers who are eligible for relief under the settlement are not required to take any action to receive compensation.

In a release, the agency said The Bancorp Bank issues prepaid cards on behalf of numerous non-bank entities. The FDIC said it determined that the bank violated Section 5 of the Federal Trade Commission Act by overcharging transaction fees for certain point-of-sale, signature-based transactions (i.e., transactions not requiring a personal identification number, or PIN) on certain stored-value cards, including the bank’s Excella Visa Prepaid Debit Card.

“As the issuing bank for these various prepaid cards, The Bancorp Bank was responsible for ensuring that these programs were operating in compliance with all applicable laws,” the agency stated.

In addition, FDIC said, it found that the bank violated the Electronic Funds Transfer Act, the Truth in Savings Act, and the Electronic Signatures in Global and National Commerce Act.

FDIC Announces Settlement with The Bancorp Bank, Wilmington, Delaware, for Unfair and Deceptive Practices