The Consumer Financial Protection Bureau (CFPB) fined Regions Bank $7.5 million  for charging overdraft fees to consumers who had not opted-in for overdraft coverage.

The bank also charged overdraft and non-sufficient funds fees on its deposit advance product despite claims that it would not.

Regions has already refunded hundreds of thousands of consumers approximately $49 million in fees, and the CFPB consent order requires the bank to fully refund all remaining consumers.

Regions Bank was represented by Oliver Ireland of Morrison Foerster in Washington, D.C.

“Today the CFPB is taking its first enforcement action under the rules that protect consumers against illegal overdraft fees by their banks,” said CFPB Director Richard Cordray. “Regions Bank failed to ask consumers if they wanted overdraft service before charging them fees. In the end, hundreds of thousands of consumers paid at least $49 million in illegal charges. We take the issue of overdraft fees very seriously and will be vigilant about making sure that consumers receive the protections they deserve.”

Regions Bank, headquartered in Birmingham, Alabama, operates approximately 1,700 retail branches and 2,000 ATMs across 16 states.

It is one of the country’s biggest banks with more than $119 billion in assets.

Among its various products and services, it has checking accounts and offers loans known as deposit advance products. With deposit advance products, the borrower authorizes the bank to claim repayment as soon as the next qualifying electronic deposit is received.

Regions offers overdraft services with its checking accounts.

An overdraft can occur when consumers spend or withdraw more money from their checking accounts than is available.

The financial institution can choose to cover the payment by advancing funds on the consumer’s behalf, and generally charges a fixed overdraft fee for doing so.

The institution can also choose to return the payment if it is a check, online bill payment, or direct debit, and then charge a non-sufficient funds fee. In recent years, most banks have adopted automated systems for making these decisions.

These systems have contributed to the evolution of overdraft from an occasional courtesy to a significant source of industry revenues.

In 2010, federal rules took effect that prohibited banks and credit unions from charging overdraft fees on ATM and one-time debit card transactions unless consumers affirmatively opted in.

If consumers don’t opt-in, banks may decline the transaction, but won’t charge a fee. The “opt-in” rule took effect in July 2010 for new accounts and August 2010 for existing accounts.