Citizens Bank of Pennsylvania will pay a $5 million civil penalty plus about $1.4 million to some 75,000 affected customers across the state to settle allegations that it deceptively marketed its overdraft and checking rewards programs, according to a consent agreement announced Tuesday by the Federal Deposit Insurance Corp.
The settlement, which stems from a 2010 compliance examination, covers a nearly four-year period from January 2008 to November 2011.
Besides Citizens' overdraft and checking rewards programs, the settlement involves the bank's stop-payment process for preauthorized recurring electronic funds transfers.
Customers eligible for refunds do not have to take any action, the FDIC said.
Citizens is the Pittsburgh region's second biggest retail bank behind PNC Bank.
"We take the results of these regulatory exams very seriously," Citizens said in an email Tuesday. "We have changed the practices identified in these exam results and are working with our regulators to address any customer impacts that they have identified."
Citizens' parent company, RBS Citizens N.A. based in Rhode Island, reached a similar settlement announced Tuesday with the Office of the Comptroller of the Currency covering some 265,000 affected customers in other states. That settlement includes an identical $5 million civil penalty plus approximately $2.5 million in customer restitution.
Citizens did not admit or deny wrongdoing in either of the settlements.
The FDIC declined to describe specifically what practices it considered deceptive. But according to the consent agreement with the OCC, problems included:
• Failing to disclose in written agreements for its savings account overdraft protection program that the bank would not transfer funds from a customer's savings account to cover overdrafts in a linked checking account if the savings account did not have funds to cover the entire overdrawn balance on a given day, even if the available funds would have covered one or more overdrawn items.
• Failing to disclose to customers who opted out of standard overdraft protection prior to Aug. 15, 2010, that certain technical limitations of the opt-out prevented it from being effective for all transactions.
To see the consent agreements online, go to http://www.occ.gov/
Patricia Sabatini: email@example.com or 412-263-3066. First Published April 30, 2013 12:15 AM