‘Overdraft protection’ fee infractions lead to $15 million fine for PNC Bank

Payment of a $15 million civil money penalty was agreed to by PNC National Bank for failure to waive fees it said it would renounce since at least 2001, and for fees charged for an overdraft protection program, the Office of Comptroller of the Currency (OCC) said in its report on enforcement actions taken in May, released Thursday.

According to OCC, the bank over at least 15 years represented in marketing and account disclosures that it would waive annual, origination, and/or overdraft protection transfer fees charged to certain line of credit accounts for consumer and business banking customers with qualifying checking accounts (demand deposit accounts).

However, two years ago, OCC said PNC executive management found the bank failed to waive the fees since at least 2001 for some qualified consumer banking customers and since at least 2002 for some qualified business banking customers. The bank reported its findings to the OCC and its own board of directors, OCC said.

In addition, OCC said, the bank offers an overdraft protection transfer program which offers customers the option to avoid standard overdraft fees by linking their accounts to another “protecting account” at the bank to cover any overdrafts. “Under this Program, customers may pay an overdraft protection transfer fee between $5 and $10 for each overdraft rather than the standard overdraft fee,” OCC said.

But, OCC said, customers who used an online process to enroll in the overdraft protection program — and who elected to use a PNC-issued credit card as the “protecting account” — were advised that the overdraft protection would become effective no later than the next business day.

“However, the Overdraft Protection Transfer Program could take up to three business days to be effective for these customers,” OCC reported.

Last year, OCC said, the agency notified PNC that that conduct constituted deceptive acts or practices in or affecting commerce in violation of Section 5 of the Federal Trade Commission Act.

OCC also said the bank has initiated (and largely completed) a plan to reimburse customers affected by the alleged deceptive practices and is “taking appropriate remedial actions to fully address and correct the violations of law.”

In the same report, OCC reported that PNC agreed May 1 to a CMP of about $207,000 for “a pattern or practice of violations of the Flood Act,” with few additional details provided.

OCC Enforcement Actions and Terminations for May 2018