The Consumer Financial Protection Bureau (CFPB) ordered Regions Bank to pay $191 million for allegedly charging illegal, surprise overdraft fees to customers.

The bank, with $161 billion in assets and approximately 1,300 offices across the South and Midwest, charged customers overdraft fees on certain ATM withdrawals and debit card purchases even though they had sufficient funds in their accounts at the time of transaction, according to the CFPB’s consent order filed Wednesday.

The $36 overdraft fee, called “authorized positive,” was imposed if a customer’s bank balance became insufficient when the transaction posted, sometimes days later. Such fees are considered unfair because the bank allows the transaction to go through and customers are not warned about the fees and can’t prevent them.

Purchases made with bank cards by signature typically take 1-3 days for the funds to be withdrawn from a bank account. If the person continued to withdraw money from his or her account, there might not be enough funds to cover the original transaction when the money is withdrawn.

Banking regulators have warned the banking industry generally about authorized-positive fees. The CFPB previously fined Regions $7.5 million in 2015 for charging overdraft fees.

The CFPB said in Wednesday’s order Regions imposed the authorized-positive fees on customers from August 2018 through July 2021, collecting approximately $141 million.

The bank charged a separate $36 fee for each transaction that posted on an account with insufficient funds, regardless of whether the account had enough money at the time of the purchase, according to the CFPB.

Many customers did not understand Regions’ overdraft practices and could not avoid the fees, the CFPB said.

Regions “employed complex and counter-intuitive overdraft practices and manipulations” that made it difficult for customers to avoid the fees, the CFPB said in a press release. Bank leadership knew the fees were illegal and should not have allowed them, the agency continued.

In July 2019, Regions’ senior executives decided to halt the imposition of the fees, but it didn’t follow through until the bank made changes that generated new overdraft fees to offset the expected revenue that would be lost, according to the consent order.

The bank’s compliance staff warned it would be at less risk if it eliminated the authorized-positive overdraft fees “with timeliness and urgency,” but the bank didn’t take the advice, the CFPB claimed.

Compliance staff warned the bank regulators would likely expect it to refund the fees to customers, the CFPB said.

“Regions Bank raked in tens of millions of dollars in surprise overdraft fees every year, even after its own staff warned that the bank’s practices were illegal,” said CFPB Director Rohit Chopra in the press release. “Too often, large financial firms make a calculation that continuing to break the law is more profitable than following it. We have more work to do to change this mentality.”

Regions will pay at least $141 million in restitution and deliver $50 million to the CFPB’s victims relief fund, the agency ordered.

Within 90 days of signing the order, the bank must submit a written compliance progress report to the CFPB approved by the bank board that lists each customer eligible for redress and how much they are to receive.

“Although Regions Bank disagrees with the CFPB’s characterizations, the bank cooperated with the investigation and is pleased to move forward,” the bank said in a statement on its website.

“Over a year ago, Regions stopped charging this particular overdraft fee,” stated Regions Chief Legal Officer Tara Plimpton. “We took this action as part of a broader series of enhancements.”