Failure to apply fee waivers and discounts to accounts led to $15 million CMP for now-merged bank

A $15 million civil money penalty (CMP) was assessed against a large San Francisco bank early last month for engaging in deceptive practices before it merged out of business, the regulator of national banks revealed Thursday.

In a release, the Office of the Comptroller of the Currency (OCC) said it reached a consent agreement May 10 with $99.9 billion MUFG Union Bank, N.A., of San Francisco. Later that month, on May 26, the bank merged with and became part of U.S. Bank, N.A., of Cincinnati, Ohio. The consent order calling for the CMP said the bank had engaged in deceptive practices regarding account disclosures in violation of section 5 of the Federal Trade Commission (FTC) Act.

Under that provision, unfair acts or practices include those that cause or are likely to cause substantial injury to consumers, cannot be reasonably avoided by the consumers, and are not outweighed by countervailing benefits to consumers or to competition.

According to the consent order, between at least 2011 and 2021, MUFG Union stated in account disclosures that all customers of its “Private Bank Program” would receive certain fee waivers and discounts. However, during that period, the OCC contended, the bank did not apply those fee waivers and discounts as described and only applied the fee waivers and discounts to certain customers of the program.

Additionally, the agency charged, the bank, between at least 2005 and 2020, stated in account disclosures that it would waive or discount the fee for safe deposit box rentals for certain customers. However, during this period, MUFG Union did not apply the safe deposit rental fee waivers and discounts as described, the OCC claimed.

Finally, the OCC said that between at least 2013 and 2021, the bank stated in account disclosures that it would waive monthly service charge fees for deposit accounts under certain conditions, including if the customer had a mortgage with the bank or if the customer maintained minimum deposit balances across multiple linked accounts.

“Regarding the customers with mortgages, the disclosures did not state that the eligible customers must affirmatively request their mortgage be linked to their deposit account to receive the monthly service charge fee waiver,” the OCC stated. “Even when customers requested to link either a mortgage or other deposit account, the bank did not always implement the requests. Therefore, during this period, the bank did not apply monthly service charge fee waivers as described.”

CMP, MUFG Union Bank, National Association, San Francisco