The Federal Reserve Board has issued a consent order against a Kentucky-based financial institution for unfair and deceptive practices.
Officials said the consent order requires Community Trust Bank, Inc. of Pikeville, Kentucky, to pay $4.75 million in restitution to approximately 11,000 consumers and make certain consumer compliance enhancements.
The Federal Reserve Board detailed in its order that the bank violated section 5 of the Federal Trade Commission Act in offering deposit account add-on products to consumers. The bank also represented to consumers all of the add-on product benefits would be effective upon enrollment when, in fact, consumers had to take additional steps to receive some of their benefits.
Board officials said the bank did not adequately disclose the additional steps before enrollment and failed to explain to consumers that they would be billed regardless of benefit activation.
Under the directive of the consent order, officials said the bank must begin making restitution payments to consumers after regulatory non-objection to the restitution plan, which is due within 60 days of the issuance of the consent order.
The Federal Reserve System is the central bank of the United States, performing five general functions to promote the effective operation of the U.S. economy and, more generally, the public interest.