Big Bank to Pay CFPB $10 Million for Alleged UDAAP Violations in Garnishments

Written By Troy Garris

The CFPB, on May 4, issued a Consent Order against a large depository institution for taking allegedly illegal actions against customers based on out-of-state garnishment orders.  The agency asserted that the Bank froze bank accounts, garnished wages, charged fees, and sent collection payments to debt collectors in violation of state and federal law.  The CFPB also indicated that the Bank added unenforceable clauses to contracts with consumers regarding the consumers’ abilities to challenge the Bank’s actions as related to garnishments.  The CFPB deemed these activities unfair and deceptive acts and practices.

The CFPB asserted that that the Bank engaged in such illegal garnishments for more than a decade, receiving more than $500,000 from customers in the course of processing more than 3,700 garnishments.  The Consent Order therefore imposes several obligations on the Bank, including ordering the Bank to pay a $10 million penalty to the CFPB Civil Penalty Fund, refund nearly $600,000 in garnishment-related fees, update contracts to remove “unenforceable” language, and comprehensively remediate processes that allow unlawful garnishment activity.

For related documents, or other information, contact Troy Garris at 301-461-8952 or troy@garrishorn.com.

Troy Garris

Troy is a business owner’s lawyer, priding himself on a results-oriented, pragmatic approach to addressing legal issues in the financial services world. In his words, “I find out what the business wants, what it needs. If I start there, I can often find a way to get them to the result wanted, or very close to it, in a legal and compliant way.”

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