M&T Bank signed a consent order and settled with the CPFB, in essence stipulating that they are to refund bank account fees to consumers who had opened accounts advertised as "free accounts".
What got M&T Bank in hot water was not that they did not offer this product.
In essence M&T Bank was spanked for two reasons: 1) M&T bank failed to tell the consumer that this particular free account required a threshold of transactional history to qualify as a free account. 2) M&T Bank automatically transferred customers accounts to fee accounts if their account did not qualify transactionally for the free one that the consumer initially opened. 3. And, M&T did not notify their customer that they were going to be moved to the new account automatically.
Regulators have, for a long time, overseen banks advertising. False or misleading advertising to lure customers has always been a hot button issue. State and Federal regulations have even gone so far as to stipulate that the font size be of a certain number.
New York, where M&T is headquartered (Buffalo) has since the 1990's (and maybe before) stated clearly that deceptive ads were a very large concern. This is why NYS was one of the first to push that anyone who advertised "no fees" on, say a mortgage transaction, make sure that they list the APR that shows clearly the fees are being rolled into the loan amount forcing the APR higher when compared to a fee based mortgage transaction, for example.
So, while M&T states this is a new regulation and one that they are compliant today, they are probably on face value stating the truth.
But, at the end of the day, advertising free and then moving clients to fee-based products and not telling them never was viewed by regulators as proper.
That is why advertising for financial products must be transparent and truthful so that consumers are not being nickeled and dime'd that, when taken in the aggregate, brings a large swath of cash to an institution.
So, M&T stating that the CPFB was not in existence and the rules are changing is correct. And, M&T's statement in essence that they are in compliance probably correct.
But truthful advertising has always been a mainstay of regulators.
And, M&T's actions at the base level were certainly not ethical.
The Funding Source Syracuse
