A Residents Bank branch in Latest York, on Friday, March 24, 2023.
Alex Kent | Bloomberg | Getty Images
WASHINGTON — The U.S. Consumer Financial Protection Bureau has issued a $9 million wonderful against one in every of the most important consumer banks within the country for violating federal consumer financial law and failing to properly process bank card disputes, in line with a judgment released Tuesday.
The agency resolved its 2020 lawsuit against Rhode Island-based Residents Bank for violating the Truth in Lending Act, which protects consumers against unfair credit billing and bank card practices. The CFPB said in its suit that the bank routinely denied fraud claims and billing error notices in certain circumstances.
As well as, Residents neglected to completely refund charges and costs, and the bank did not issue mandatory acknowledgement letters and denial notices in response to billing errors, in line with the lawsuit.
“Federal law provides essential rights to credit cardholders when disputing transactions and resolving billing errors,” CFPB Director Rohit Chopra said in a press release. “As outstanding bank card debt approaches $1 trillion, the CFPB can be closely watching the conduct of the bank card industry.”
Under TILA, bank card issuers are required to analyze all fraud claims and refund the quantity in query plus any associated fees if unauthorized use is found. But Residents routinely denied unauthorized use claims and billing error notices to customers who did not return the bank’s fraud affidavit, in line with the judgment.
Automatic denials also were issued when consumers refused or couldn’t comply with a statute requiring notarization for the affidavit or the promise to seem in court, the suit said. As well as, CFPB said Residents rerouted requests for referrals to credit counseling organizations from its designated toll-free line to general customer support or collections based on account status.
The malpractice began in at the least 2010 and endured into early 2016, in line with the suit.
Residents Bank noted that the problem involved a small subset of its bank card customers.
“While Residents continues to disagree with the CFPB’s stance with respect to those long-resolved issues, which were self-identified and voluntarily addressed years ago, we’re pleased to place this matter behind us,” said Polly Klane, general counsel of Residents.
Other than the $9 million penalty to the CFPB’s victims relief fund, Residents must ensure its bank card practices comply with the law and stop enacting the fraud affidavit, in line with the discharge.
Residents Bank is among the many 15 largest consumer banks within the U.S. with branches and ATMs in 14 states and Washington, D.C. It’s a subsidiary of Residents Financial Group, which reported $222 billion in assets as of March 31.
