Regions Bank Lawsuit: CFPB Overdraft, DOJ, and Shareholder Cases

Regions Bank has been hit with roughly $393 million in regulatory penalties and settlements since 2000, according to Violation Tracker data compiled by Good Jobs First, with the single largest action being a $191 million Consumer Financial Protection Bureau settlement in 2022 over illegal overdraft fees.¹ A Regions Bank lawsuit brought by a shareholder over that same overdraft misconduct is now proceeding against nine current and former directors in Delaware. Other major matters include a $52.4 million False Claims Act settlement over defective FHA mortgages, Federal Reserve penalties for loan-reporting and flood-insurance failures, and SEC charges tied to both an investor trust fraud and recordkeeping violations.

The $191 Million CFPB Overdraft Settlement

On September 28, 2022, Regions entered a consent order requiring it to pay $141 million in refunds to customers and a $50 million civil penalty to the Bureau.²³

The fees in question are called “authorized positive, settled negative.” A customer would swipe a debit card or use an ATM when the account showed enough money, the bank would approve the transaction, and then, hours or days later, other debits cleared first and pushed the balance below zero. Regions charged an overdraft fee on the earlier transaction anyway. The CFPB found this generated roughly $141 million in fees between August 2018 and July 2021.⁴⁵

The Bureau said Regions executives knew the system produced these charges but delayed a fix while looking for ways to replace the lost revenue. In 2019, overdraft and non-sufficient-funds fees made up roughly 18% of the bank’s non-interest income.⁵

Regions said it had already stopped the fee more than a year before the settlement and updated its transaction processing so credits now clear before debits in near-chronological order. It cooperated with the investigation but said it “disagrees with the CFPB’s characterizations.”³

Who Got Refunds

Anyone charged an authorized-positive overdraft fee between August 2018 and July 2021 was eligible. Regions identified affected customers itself and sent refunds by direct deposit where possible and by paper check otherwise. There was no claim form. The order barred the bank from making any refund contingent on a customer waiving legal rights.⁴

The CFPB terminated the consent order on July 21, 2025, confirming Regions had met its obligations.²

In June 2023, Regions introduced “Regions Overdraft Grace,” giving customers an extra business day to deposit funds and avoid a fee when overdrawn by more than $5. It also dropped overdraft protection transfer fees and returned-item fees, capped overdraft charges at three per day, and rolled out early direct deposit tools.⁶

The Earlier 2015 Overdraft Order

The 2022 case was not the first. In April 2015, the CFPB ordered Regions to pay a $7.5 million civil penalty and confirmed the bank had already refunded about $49 million to consumers for a separate set of overdraft violations.⁷

Regulation E requires banks to obtain affirmative opt-in consent before charging overdraft fees on ATM and one-time debit card transactions. An internal Regions working group concluded, incorrectly, that customers with “linked coverage” accounts were exempt from the opt-in rule. That produced at least $47 million in unlawful fees between July 2010 and June 2012. A separate programming error caused about $1.9 million in unlawful fees on the bank’s “Regions Ready Advance” loan repayment product between 2011 and 2013. The bank refunded the money and was ordered to expunge negative credit reporting tied to the charges.⁷

Shareholder Suit Against the Board

The 2022 CFPB settlement produced a derivative lawsuit that is now the most closely watched active Regions Bank lawsuit. Shareholder Katherine Richards Brewer sued 22 current and former directors and officers in the Delaware Court of Chancery, seeking to recover the $191 million from the fiduciaries she says caused the misconduct. The case is Brewer v. Turner, C.A. No. 2023-1284-KSJM.⁸

Brewer brought two breach-of-fiduciary-duty theories. A Caremark claim alleges the directors failed to monitor legal compliance and ignored clear warnings. A Massey Energy claim alleges the board intentionally pursued illegal conduct to protect profits.⁹

The Whistleblower Warning

The central piece of evidence is a November 2019 complaint from Jeffrey A. Lee, Regions’ former Deputy General Counsel. Lee said he had warned management as early as March 2018 that the overdraft practices violated federal law and CFPB guidance, and that he was fired for raising the issue. His complaint, sent directly to the board, also alleged retaliation and discrimination over a promotion he had sought. Regions settled with Lee confidentially within two weeks.⁸

Chancellor Kathaleen St. Jude McCormick called Lee’s complaint the “most powerful red flag” in the case. Although the board had reason to question Lee’s motives given his personal grievances, his role as a lawyer focused on legal risk made his warning directly relevant to the illegal conduct.⁹

The Ruling

On September 29, 2025, Chancellor McCormick largely denied the defendants’ motion to dismiss. She found it “reasonably conceivable” that directors who received the Lee complaint “intentionally continued the illegal practices to give the bank time to develop a replacement revenue source.” The court held that nine of the 14 directors on the board when suit was filed face a substantial likelihood of personal liability, satisfying the demand-futility test. Hiring a law firm to investigate, McCormick wrote, does not provide “absolution” if the board then fails to act on the findings in time.⁸¹⁰

Claims were dismissed against directors who left the board before the Lee complaint arrived, those who joined after the misconduct ended, and an officer group whose claims the plaintiff waived in briefing.⁹ The case is proceeding past the pleading stage against the remaining nine directors, with no trial date set as of mid-2026.⁸

DOJ False Claims Act Settlements

FHA Mortgage Lending ($52.4 Million, 2016)

In September 2016, Regions paid $52.4 million to resolve DOJ allegations that it falsely certified FHA-insured mortgage loans as meeting HUD underwriting requirements between 2006 and 2011. The bank admitted specific failures: overstating or failing to confirm borrower income, failing to verify employment, understating borrower liabilities, and not confirming the source of gift funds used for down payments.¹¹

Regions also admitted its quality control program was inadequate. Its loan-sampling algorithm was not updated regularly, so it reviewed far fewer FHA loans than required, and it did not self-report any materially deficient loans to HUD until 2011. Insurers covered roughly $47 million of the $52.4 million payment.¹²

PPP Loan Forgiveness ($4.9 Million, 2026)

In May 2026, Regions agreed to pay about $4.9 million to resolve civil DOJ claims that it improperly approved forgiveness of a Paycheck Protection Program loan that was ineligible under program rules. The loan, forgiven in August 2021, was associated with Missouri resident Gregory A. DeLine and several business entities. The government said Regions was unjustly enriched by the SBA payment it received on forgiveness.¹³

Regions called it “one individual matter regarding one specific loan” out of roughly 75,000 PPP loans it facilitated, said it disagreed with the DOJ’s claims, and settled to close the matter. The agreement is civil only and includes no admission of wrongdoing.¹⁴

Federal Reserve Penalties

Loan Reporting ($51 Million, 2014)

In June 2014, the Federal Reserve imposed a $46 million penalty on Regions for misconduct in the first quarter of 2009 tied to how the bank identified and reported non-accrual loans. Regulators cited internal control deficiencies and a failure to give examiners accurate and complete information. The Alabama Department of Banking assessed an additional $5 million in a coordinated action.¹⁵

Three former executives faced individual action. Thomas A. Neely, Jr., the bank’s former senior commercial credit executive, was the subject of proceedings seeking a lifetime banking ban and a $2.4 million personal penalty. Michael J. Willoughby and Jeffrey C. Kuehr, two other former officers, consented to permanent bans from the industry. The SEC separately entered a deferred prosecution agreement with Regions Financial Corp., the parent company, and credited its cooperation.¹⁵

Flood Insurance Compliance ($2.95 Million, 2023)

In August 2023, the Federal Reserve fined Regions about $2.95 million for unsafe and unsound practices in its flood insurance program. The bank failed to effectively monitor a portfolio of home equity loans for more than a year, a lapse tied to changes in loan servicing platforms and third-party providers. The Fed found a “pattern or practice” of individual violations of the National Flood Insurance Act.¹⁶

SEC Enforcement Actions

Investor Trust Fraud ($1 Million, 2009)

In September 2009, the SEC charged Regions with securities violations for its role as trustee for investment plans operated by U.S. Pension Trust Corp. and U.S. College Trust Corp. The SEC said the scheme raised $255 million from about 14,000 investors, most of them in Latin America, while charging undisclosed commissions and fees of up to 85% of initial contributions. Regions, the agency said, gave the operation a “false air of legitimacy” by letting U.S. Pension Trust use the bank’s name in marketing materials, hosting promotional videos, and sending staff to meet prospective investors.¹⁷

Regions settled the same day, paying a $1 million civil penalty without admitting or denying the allegations. The money was directed to a Fair Fund to compensate injured investors.¹⁸

Off-Channel Communications ($750,000, 2024)

In September 2024, Regions Securities LLC was one of 12 firms the SEC charged for failing to preserve electronic business communications. Since at least September 2019, personnel including senior managers routinely conducted business by personal text message. Those messages were never archived or monitored, and in one instance employees discussed strategy and terms for a potential M&A transaction with a customer off-channel.¹⁹

Regions self-reported, which the SEC said reduced the penalty. The firm admitted the facts, was censured, paid a $750,000 civil penalty, and agreed to hire an independent compliance consultant.²⁰

Employee and Agent Lawsuits

401(k) ERISA Case ($22.5 Million, 2014)

Regions paid $22.5 million to settle breach-of-fiduciary-duty claims brought by employees over their 401(k) accounts. The consolidated case, In re: Regions Morgan Keegan Securities, Derivative and ERISA Litigation, alleged the bank exposed employees’ retirement savings to risky investments, including the bank’s own stock and Morgan Keegan bond mutual funds that were marketed as safe but held substantial subprime debt. Employees also alleged the plan carried funds with excessive administrative fees.²¹

Wage-and-Hour Collective Action (Settled 2022)

In 2018, a former employee filed a collective action in the U.S. District Court for the Eastern District of Missouri alleging that Regions failed to pay hourly, non-exempt employees for time spent on required branch-opening security procedures before clocking in, in violation of the Fair Labor Standards Act.²² The case, Hodapp v. Regions Bank, resolved with final settlement approval on August 24, 2022.²³

PPP Agent Fee Class Action (Terminated 2020)

In April 2020, an Alabama CPA firm filed a proposed class action alleging that Regions refused to compensate agents (accountants, attorneys, and consultants) who prepared PPP loan applications for borrowers. SBA guidance called for agents to be paid from lender processing fees. According to the complaint, Regions told the firm “Regions is not paying agent fees for PPP loans.”²⁴ Court records show the case was terminated in October 2020; available records do not detail the basis.²⁵

A Note on AmSouth

Some tallies of Regions’ regulatory history sweep in a $10 million anti-money laundering penalty assessed in October 2004 against AmSouth Bank. That action predates the 2006 merger that created the current Regions. FinCEN and the Federal Reserve jointly found AmSouth had failed to establish an adequate AML program and had not filed accurate and timely suspicious activity reports. The Federal Reserve and the Alabama Superintendent of Banks issued a cease-and-desist order, and AmSouth entered a deferred prosecution agreement with the U.S. Attorney for the Southern District of Mississippi over Bank Secrecy Act violations. The Fed restricted the company’s expansion, including branch growth, until it reached substantial compliance.²⁶²⁷

The Cumulative Picture

Across all recorded regulatory actions since 2000, Regions Financial and its subsidiaries have paid close to $393 million in penalties spread across 20 separate cases, per Violation Tracker. The two CFPB overdraft matters account for the largest share, followed by the FHA mortgage settlement and the 2014 Federal Reserve loan-reporting action. Smaller cases have addressed employment discrimination, wage-and-hour violations, an air pollution matter in Tennessee, and a Family and Medical Leave Act violation.¹

1
Good Jobs First. Violation Tracker – Regions Financial
2
Consumer Financial Protection Bureau. CFPB Orders Regions Bank to Pay $191 Million for Illegal Surprise Overdraft Fees
3
Regions Financial Corporation. Regions Bank Comments on Settlement With the Consumer Financial Protection Bureau
4
Consumer Financial Protection Bureau. CFPB Consent Order, File No. 2022-CFPB-0008
5
Upper Michigan’s Source. Regions Bank to Refund $141M for Illegal Overdraft Fees
6
Regions Financial Corporation. Regions Bank Gives Customers More Time to Avoid Overdrafts
7
Consumer Financial Protection Bureau. CFPB Consent Order, File No. 2015-CFPB-0009
8
Justia. Katherine Richards Brewer v. Josh M. Turner, Jr. Et Al.
9
ABA Banking Journal. Delaware Chancellor Declines to Dismiss Lawsuit Against Regions Bank Board Members Over $191 Million CFPB Consent Order
10
Bloomberg Law. Regions Financial Directors Ordered to Face $191 Million Lawsuit
11
The WBK Firm. Regions Bank Reaches $52.4 Million Settlement to Resolve Alleged False Claims Act Liability
12
Investing.com. Regions Financial to Pay $52.4M in a Settlement With DOJ
13
U.S. Department of Justice. Regions Bank to Pay $4.9 Million to Resolve Civil Liability in Connection With Ineligible Paycheck Protection Program Loan Forgiveness
14
Banking Dive. Regions Bank Settlement Over PPP Loan Allegations
15
Federal Reserve Board. Federal Reserve Board Announces Enforcement Action Against Regions Bank
16
Federal Reserve Board. Federal Reserve Board Announces Enforcement Action Against Regions Bank
17
SEC. SEC v. Regions Bank, Litigation Release No. 21215
18
SEC. SEC v. Regions Bank, Litigation Release No. 21682
19
SEC. SEC Charges 12 Financial Firms for Recordkeeping Failures
20
SEC. SEC Administrative Proceeding, File No. 3-22163
21
BenefitsLink. Regions Financial ERISA Settlement
22
Swartz Legal. FLSA Court-Authorized Notice, Hodapp v. Regions Bank
23
Swartz Legal. Regions Bank FLSA Class Action Lawsuit
24
ClassAction.org. Class Action Claims Regions Bank Refuses to Pay Agents Who Prepare PPP Loan Applications
25
CourtListener. Leigh King Norton and Underwood LLC v. Regions Financial Corporation
26
Federal Reserve Board. Federal Reserve Board Announces Enforcement Action Against AmSouth Bank
27
Edgar Online. AmSouth Bancorporation Regulatory Filing