Regulators fine bank $20 million for failing to check deposits

Regulators fine bank $20 million for failing to check deposits
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Financial regulators ordered a bank to pay back $11 million to consumers and pay a $20 million fine, after determining it repeatedly failed to give customers their full deposits.

A trio of regulators charged that Citizens Bank failed for years to rectify discrepancies between deposit slips and actual funds deposited. While the differences were often small, over time it added up to millions of dollars customers were unfairly shorted by the bank, regulators said.

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The Consumer Financial Protection Bureau, Federal Deposit Insurance Corporation and Office of the Comptroller of the Currency entered into a joint enforcement action against the bank.

“Citizens Bank regularly denied customers the full credits of their deposits when there were discrepancies between deposit slips and the actual money transferred into the bank,” said CFPB Director Richard Cordray. “The bank chose to ignore these discrepancies and harmed many consumers by pocketing the difference.”

According to the CFPB, the bank had a policy from 2008 to 2012 that stated that if the difference between a deposit slip and the actual amount fell below a certain size, no action was taken. In other words, if a deposit resulted in a discrepancy of less than $50, the bank took no steps to address it. That threshold was later lowered to $25 from 2012 to 2013.

Regulators noted that by failing to check small discrepancies between deposits, sometimes the bank came out on the losing end as more money was credited than actually required. But by failing to correct errors, and also by claiming the bank had a verification process in place for deposits, regulators determined the bank was in the wrong.

The CFPB ordered the bank to pay back $11 million to consumers, on top of a $7.5 million fine. The FDIC separately fined the bank $3 million, and the OCC tacked on another $10 million penalty.