July 2016

$10 Million For Alleged Deceptive Marketing (RegE Violations)

Santander allegedly deceptively marketed its Santander Account Protector (SAP) product, and allegedly failed to obtain a valid affirmative “opt-in” consent before charging for overdraft fees in connection with ATM and one-time debit card transactions.

Santander allegedly misled consumers about:

  • The inherent sales nature of calls promoting overdraft coverage o for example, falsely stating ‘This is not a sales call’
  • Overdraft fees
    • Failed to inform consumers that, in addition to the initial $35 fee, Respondent would charge consumers an additional $35 fee on the sixth business day of any remaining unpaid balance
  • Transactions covered
    • did not cover checks, bill-pay
  • Consequences of rejecting overdraft coverage
    • telling consumers they would face additional charges if they opted-out of the program

Additionally, Santander allegedly turned a blind eye when CSRs deviated from approved scripts (under pressure of discipline or termination for failure to meet sales goals).

As a result Santander must:

  • Implement a valid opt-in – compliant with RegE – before enrolling consumers in SAP
  • Not misrepresent the fees & coverage of the program
  • Re-obtain opt-in consent from current program members o no opt-in quotas
    • no CSR may suffer adverse actions based on number of opt-ins
    • no financial incentives may be offered in connection with opt-ins
  • Calls must be periodically audited to ensure compliance
  • Perform a compressive UDAAP assessment of all marketing and sales practices
  • Develop a CMS
    • written policies and procedures to effectively manage, detect, and mitigate violations of law or company policies
    • records of consumer complaints
    • all corrective measures must be submitted and approved by the CFPB, and records kept for 5 years

And, oh yeah – they have to pay $10 million in civil penalties.
jbho: a reminder that you should probably include remuneration criteria in any risk calculus.

Also, fellow ToastMasters may enjoy how the quotes in the complaint include all the ‘ums’ spoken by the CSRs.


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