The Consumer Financial Protection Bureau (CFPB) has ordered Delaware-based Santander Bank, N.A. to pay a $10 million fine for illegal overdraft service practices. Santander’s telemarketing vendor deceptively marketed the overdraft service and signed certain bank customers up for the service without their consent. In addition to paying the civil money penalty to the CFPB, Santander must go back and give consumers the opportunity to provide their affirmative consent to overdraft service, not use a vendor to telemarket its overdraft service, and it must increase oversight of vendors it uses to telemarket consumer financial products or services.
Santander operates a network of nearly 700 retail branch offices in Connecticut, Delaware, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, and Rhode Island.
From 2010 to 2014, Santander marketed and enrolled consumers in its “Account Protector” overdraft service for ATM and one-time debit card transactions, and charged consumers $35 per overdraft. Santander used a telemarketer to call consumers to persuade them to opt in to the overdraft service and rewarded the telemarketer with a higher hourly rate when it hit specified sales targets.
In 2010, federal rules took effect prohibiting banks and credit unions from charging overdraft fees on ATM and one-time debit card transactions unless consumers affirmatively opt in. If consumers don’t opt in, banks may decline the transactions because of insufficient or unavailable funds, and can’t charge an overdraft fee.
The CFPB found that Santander marketed its overdraft service deceptively during telemarketing calls and enrolled consumers in overdraft service without their consent in violation of the opt-in rule. The CFPB found Santander Bank’s illegal and improper practices included:

  • Signing consumers up for overdraft service without their consent;
  • Deceiving consumers that overdraft service was free;
  • Deceiving  consumers about the fees they would face if they did not opt in;
  • Falsely claiming the call was not a sales pitch; and
  • Failing to stop its telemarketer’s deceptive tactics.

Enforcement Action
Santander Bank violated the Electronic Fund Transfer Act and the Dodd-Frank Act. The CFPB’s order requires that Santander Bank:

  • Validate all opt-ins associated with the telemarketer: Santander will contact all consumers who were enrolled in Account Protector through the bank’s telemarketer, and ask them whether they wish to be opted in. Santander will not be able to charge those consumers overdraft fees unless they affirmatively consent to opting in.
  • Not use a vendor to telemarket overdraft service:Santander is prohibited from using a vendor to conduct outbound telemarketing of overdraft service to consumers. Santander also may not require its employees to generate a target number of opt-ins or provide its employees with financial incentives in connection with opt-ins.
  • Increase oversight of all third-party telemarketers: Santander will develop and implement a new or revised policy governing vendor management for service providers engaged in telemarketing of consumer financial products or services.
  • Pay a $10 million penalty:Santander will make a $10 million penalty payment to the CFPB’s Civil Penalty Fund.

The full text of the CFPB’s consent order is available at: