Two banks that reportedly are part of Bread Financial Inc. were each assessed their own $1 million civil money penalties (CMPs) by the federal bank deposit insurer over alleged violations of the Federal Trade Commission (FTC) Act, according to information released Friday.
The two banks – Comenity Capital Bank of Draper, Utah, and Comenity Bank of Wilmington, Del. – were assessed the penalties under consent orders in August with the Federal Deposit Insurance Corp. (FDIC). The FDIC said the FTC Act violations “related to reward programs and the processing of automatic payments matters resulting from the conversion from an internal core system platform to an external core system platform.” It also acknowledged the banks’ payments of their respective penalties.
In another action, the agency barred a former chief executive of Independence Bank, East Greenwich, R.I., from ever again participating in the affairs of a federal insured financial institution. Meanwhile, the agency has a public hearing involving the bank slated for Oct. 15.
The FDIC order (also a consent order) states that Robert S. Catanzaro – previously CEO, a director, and the trustee of a trust that is the majority shareholder of Independence Bank – between mid-2017 and about mid-2019 “failed to implement and supervise appropriate oversight and risk management practices over the Bank’s Small Business Administration (SBA) Small Loan Advantage lending program.”
The FDIC said Catanzaro’s actions caused the bank a loss exceeding $1.7 million. While the order references a previous notice that also pointed to a CMP assessment, the consent order released Friday said the agency it has voluntarily dismissed that.
The Oct. 15 hearing with the bank itself is set to take place at the U.S. Bankruptcy Court for the District of Rhode Island.