The Consumer Financial Protection Bureau (CFPB) took action against M&T Bank, headquartered in Buffalo, N.Y., for deceptively advertising free checking accounts. The CFPB found that M&T lured in consumers with promises of "no strings attached" free checking, without disclosing key eligibility requirements. When consumers failed to meet the requirements, M&T automatically switched them to checking accounts with fees. M&T will provide $2.9 million in refunds to the approximately 59,000 consumers deceived into paying fees and it will pay a $200,000 penalty for the violations.

The CFPB found that M&T:

• Deceptively advertised checking accounts with no strings attached: M&T's free checking account advertisements included such ads as, "Untangle yourself from monthly service fees. Get a free checking account at M&T. No strings attached." But M&T did not disclose in such ads that the free checking account customers had to maintain a minimum level of account activity with deposits and withdrawals to maintain the free account.

• Automatically converted many free checking accounts into accounts with fees: If there was no account activity for 90 days, M&T automatically converted the "Free Checking" accounts to "M&T First" checking accounts. Consumers with "M&T First" accounts who failed to maintain an average or combined monthly balance of $1,500 were charged fees of $5 to $14 per month.

• Did not adequately alert consumers to the account conversions: The only indication customers received that their "Free Checking" account had been converted to an "M&T First" account due to account inactivity was that "M&T First" would appear on account documents, such as paper statements.

During the period covered in the order, M&T converted approximately 80,000 "Free Checking" accounts to "M&T First" accounts. Of those, about 59,000 were charged account fees because they did not meet the $1,500 threshold required in the "M&T First" accounts. M&T assessed approximately $2.9 million in monthly maintenance fees from these consumers.