The Bancorp Pays $3M Penalty Tied to Electronic Fund Transfer Claims

The Bancorp in Wilmington, Del., has agreed to pay a $3 million civil money penalty to address issues tied to electronic fund transfer practices.

The $4.7 billion-asset company disclosed in a regulatory filing Monday that its bank had entered into an amended consent order with the Federal Deposit Insurance Corp. without admitting or denying wrongdoing. The order, largely a restatement of an August 2012 order, is based on FDIC claims regarding electronic fund transfer error resolution practices, account termination practices and fee practices of various third parties.

The new order added new oversight, requiring the company to establish a complaint and error claim oversight and review committee to review and oversee the bank's processes and practices for handling, monitoring and resolving consumer complaints and electronic fund transfer error claims. The committee will also be responsible for reviewing management's plans for correcting any weaknesses that may be found.

The company also has to implement a corrective action plan regarding prepaid cardholders who asserted or attempted to assert electronic fund transfer error claims and to provide restitution to cardholders harmed by the bank's practices.

In addition to the money penalty, which was paid in the fourth quarter, The Bancorp also agreed to make monetary restitution to cardholders identified as being "adversely affected by a denial or failure to resolve an EFT error claim," the filing said. The Bancorp said it should be reimbursed by third parties for any claims from cardholders.

The Bancorp has weathered some rough periods in the last few years. The FDIC hit the company with an enforcement action last year that curbed the growth of its prepaid business and required management to beef up the company's money-laundering controls.

A flurry of unwelcome — and seemingly unrelated — news followed. The FDIC assessed the company a surcharge tied to the agency's treatment of prepaid cards. The Bancorp then discovered several million dollars in unreported loan losses after it shut down its commercial bank.

The company in September put an end to recent accounting woes by filing a batch of long-overdue financial reports. The filings had been delayed by a credit review, stemming from the discovery earlier this year of $28 million in unreported loan losses.

Frank Mastrangelo, who succeeded longtime leader Betsy Cohen when she retired last December, stepped down as CEO earlier this month.