On May 10, 2021, the Federal Deposit Insurance Corporation (FDIC) announced a settlement with an Oregon-based bank concerning the bank’s alleged violations of Section 5 of the Federal Trade Commission Act (FTC Act), 15 U.S.C. § 45(a)(1). Under the settlement, the bank stipulated to the issuance of an order to pay a civil money penalty of $1.8 million.
The FDIC alleged the bank violated Section 5 by engaging in unfair and deceptive practices in its collections practices related to commercial equipment financing conducted through a subsidiary. Specifically, the FDIC alleged the subsidiary charged undisclosed fees to customers with past due accounts, including collection call and letter fees and third-party collection fees. The FDIC also alleged that the bank’s subsidiary engaged in excessive and sequential collection calls, disclosed customer debt information to third parties, and told customers it would report delinquencies to consumer reporting agencies, though the subsidiary had both a policy and practice of not doing so.
In addition to the civil penalty, the bank voluntarily paid approximately $1.6 million dollars in restitution to customers who were allegedly charged undisclosed collection fees.
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