M&T Bank will pay $2.9 million to about 59,000 consumers to settle federal charges it deceptively advertised free checking accounts.
The Consumer Financial Protection Bureau said Thursday it found that from January 2009 to September 2012 M&T lured in consumers with promises of “no strings attached” free checking, without disclosing eligibility requirements.
When consumers failed to meet the requirements, M&T switched them to checking accounts with fees.
M&T will also pay a $200,000 penalty.
“Although M&T promised people free checking, tens of thousands of consumers ended up paying for a product they had thought was free,” said Richard Cordray, bureau director.
It’s illegal for banks and credit unions to deceptively advertising deposit accounts. If an account is described as free or no cost, it can’t have any maintenance or activity fees, or any fees to deposit, withdraw, or transfer money.
M&T converted about 80,000 “Free Checking” accounts to “M&T First” accounts. Of those, about 59,000 were charged account fees because they didn’t meet the $1,500 minimum required in the “M&T First” accounts. M&T assessed about $2.9 million in monthly fees from these consumers.
Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the bureau has the authority to take action against banks and other financial institutions for violating consumer financial laws.
M&T will credit consumers who still have an open account for any fees charged, send checks to those with closed accounts, and update the credit reports to the credit bureaus in cases where they closed an account due to a negative balance caused by fees.
