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East Boston bank fined on overdrafts

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January 31, 2012|By Todd Wallack

Federal regulators have ordered East Boston Savings Bank to pay a $35,000 penalty for violating consumer protection rules.

Specifically, the Federal Deposit Insurance Corp. said it sanctioned the Boston community bank for “unfair and deceptive acts or practices’’ involving its overdraft program, which allows the bank to charge customers when they overdraw their accounts.

The FDIC said East Boston agreed to pay the penalty without admitting any violations. The order also suggests the bank has reimbursed at least some affected customers, but did not contain additional details. East Boston Savings chief executive Richard J. Gavegnano could not be reached for comment.

Some banks have come under criticism for hitting customers with penalties of up to $35 each time when they make purchase with debit cards or write checks with insufficient funds in their accounts. Under new federal rules, banks are generally required to obtain customers’ permission before charging them overdraft fees for making purchases with their debit cards.

East Boston Savings, which acquired Mt. Washington Cooperative Bank in 2009, operates 15 branches in the Boston area.