Chicago bank pays $4.1M CMP for deceptive practices

The Board of Governors of the Federal Reserve System has announced a consent order to cease and desist and civil money penalty assessments totaling $4,110,000 against Cole Taylor Bank of Chicago, Illinois, related to the participation by the bank and its agent, Higher One, Inc. of New Haven, Connecticut (Higher One), in deceptive practices in violation of section 5 of the Federal Trade Commission Act. Higher One, under Cole Taylor's oversight, offered students a deposit account and debit card product known as OneAccount. The FRB determined that, at various points in the financial aid refund selection process, students were mislead about the OneAccount by:

• The omission of material information about how students could get their financial aid refund (the amount of financial aid in excess of tuition and school fees) without having to open a OneAccount
• The omission of material information about the fees, features, and limitations of the OneAccount product
• The omission of material information about the locations of ATMs where students could access OneAccount without cost and the hours of availability of those ATMs
• The prominent display of the school logo, which may have erroneously implied that the school endorsed the OneAccount product

Under the Order, which was issued jointly with the Illinois Department of Financial and Professional Regulation, Division of Banking, the bank remains contingently liable for up to an additional $30 million in required restitution if Higher One cannot pay any amounts of restitution that Higher One may be required to pay for the benefit of consumers who opened OneAccounts at Cole Taylor under the terms of any enforcement action by the Board of Governors against Higher One. Finally, the Board's press release stated that actions are also pending against another state member bank that has a similar arrangement with Higher One relating to OneAccounts.