Whereas, the Comptroller of the Currency of the United States of America (“Comptroller”), through his national bank examiners and other staff of the Office of the Comptroller of the Currency (“OCC”), has conducted an examination of Woodforest National Bank, The Woodlands, Texas (“Bank” or “Woodforest”), and has identified deficiencies in the Bank’s compliance with consumer laws. The findings of this examination have been made known to the Bank.
Whereas, the Bank, by and through its duly elected and acting Board of Directors (“Board”), has executed a “Stipulation and Consent to the Issuance of a Consent Order for a Civil Money Penalty,” dated October 1, 2010 (“Stipulation”), that is accepted by the Comptroller. By this Stipulation, which is incorporated by reference, the Bank has consented to the issuance of this Consent Order for a Civil Money Penalty (“Order”) by the Comptroller.
The Comptroller finds, and the Bank
neither admits nor denies, the following:
(1) The Bank operates an overdraft program known as PrivilegePay. Until approximately December 31, 2009, customers were automatically enrolled in PrivilegePay thirty (30) days after account opening. Customers enrolled in PrivilegePay are charged a per
transaction fee each time a transaction causes a customer’s account to become overdrawn.
(2) The Bank imposes limits on the amount by which an account may be overdrawn at any time although some customers are allowed to exceed the overdraft limit for their accounts. Prior to September 2009, the Bank had no daily, monthly, or other limit on the amount of overdraft fees a customer could incur. The Bank also did not monitor customer accounts for excessive usage of PrivilegePay. The combination of these factors caused some customers to incur excessive aggregate amounts of overdraft fees.
(3) Prior to approximately May 15, 2010, accounts that were not brought to a positive balance within seven days were charged a “continuous overdraft fee.” This practice was unfair because, once continuous overdraft fees began, many Bank customers were unable to avoid the assessment of continuous overdraft fees.
(4) The Bank marketed or promoted its deposit account products through a brochure that highlighted the free or low cost features of certain accounts while omitting information about costly features of the account, such as overdraft protection. The brochure also suggested that certain accounts were well-suited for customers who had previous difficulty in managing their Bank accounts while omitting information about the costs of overdraft protection. The brochure was deceptive because it omitted information about high-cost features of accounts at the Bank, such as PrivilegePay.
(6) Prior to December 31, 2009, the Bank provided a written disclosure at account opening that described the features of PrivilegePay but did not mention that consumers could be automatically reinstated into PrivilegePay after their use of the program was suspended or terminated. The omission of this information was deceptive because it led customers to believe that they would not be automatically reinstated into PrivilegePay.
ORDER FOR A CIVIL MONEY PENALTY
Without admitting or denying any wrongdoing, the Bank hereby consents to the payment of a civil money penalty in the amount of $1,000,000, which shall be paid upon execution of this Order.
Payment of the penalty shall be made by a wire transfer to the Comptroller’s account #2071-0001, ABA Routing #021030004.
A photocopy of the confirmation of the wire transfer shall be sent immediately, by overnight delivery, to the Director of Enforcement and Compliance, Office of the Comptroller of the Currency, 250 E Street SW, Washington, DC 20219.
This Order shall be enforceable to the same extent and in the same manner as an effective and outstanding order that has been issued and has become final pursuant to 12 U.S.C. §§ 1818(h) and (i) (as amended).
* * * *
It is clear that the events that caused OCC to take action took place at Woodforest National Bank, not at Woodforest Financial Services. I don’t see any political implications in this.