Scotiabank Ordered to Pay $1.006 Billion to 61,000 Consumers for Harassment and Unlawful Charges

Original article: Acoso, hostigamiento y cobros indebidos: Scotiabank tendrá que pagar $1.006 millones a 61 mil consumidores

SERNAC Files Collective Lawsuit Against Scotiabank Over Various Illegal Practices Including Harassment and Improper Charges

The Third Civil Oral Court in Santiago has approved a historic conciliatory agreement that mandates Scotiabank to compensate a total of $1,006,963,688 to 61,546 affected consumers, stemming from systematic harassment, intimidation, and unlawful collections during their extrajudicial collection processes.

This ruling concludes a collective lawsuit initiated by the National Consumer Service (SERNAC), setting a significant precedent for consumer rights protection.

Scotiabank Engaged in Unlawful Charges and Abusive Clauses

The case emerged following SERNAC’s oversight of the banking industry, which revealed behaviors violating the Consumer Protection Law in at least two institutions: Scotiabank and Banco Itaú. Notable irregularities include harassment through repeated phone calls outside legal bounds and the imposition of charges for inappropriate collection expenses.

In Scotiabank’s case, the investigation found improper charges, as fees were applied for collection efforts made «within the first 20 days of delinquency, or without action followed by charges after the 21-day mark, or when charges exceeded legal limits,» the agency reported.

Additionally, there was a noted «lack of effective collection efforts,» with the financial entity failing to «carry out effective collection management within the first 15 days following the due date of the debt,» depriving customers of a legal discount; furthermore, «abusive clauses» included in contracts violated consumers’ rights.

Compensation for Affected Customers

The judicial agreement, covering infractions from May 12, 2020, to May 12, 2022, establishes a reparation mechanism, dividing affected individuals into four groups based on specific compensation criteria.

Group 1, comprising 37,099 consumers, will receive a full refund of improper charges incurred within the initial 20 days of delinquency or those not acted upon after 21 days, totaling $837,150,965.

Group 2, consisting of 3,883 individuals, will be compensated for charges that exceeded legal limits, amounting to $15,034,383.

Group 3, with 25,654 customers, will receive $146,775,113 for not having the 0.2 UF discount applied due to inadequate early collection efforts.

Finally, Group 4, made up of 6,831 consumers who experienced harassment, will receive a collective compensation of 695.14 Unidades de Fomento (UF), equivalent to $27,594,145.36, for the distress and violations they endured.

Additionally, an extra compensation of 0.15 UTM (approximately $10,400) will be provided to those who filed a formal complaint with SERNAC, acknowledging their proactive role in defending their rights.

All amounts and repayment processes will be subject to external auditing to ensure transparency and compliance.

The payment methods will vary depending on the individual’s circumstances: current customers without debt will receive an electronic transfer; those with debt will see the compensation offset against their balance, while former customers will receive an electronic check that can be cashed at any branch.

SERNAC: «Consumers Have the Right to Dignified Treatment»

Carolina González, Acting National Director of SERNAC, emphasized the importance of the ruling and stated that «the right to receive dignified and respectful treatment is fundamental.»

«This means that banking institutions cannot use delinquency as a justification for exerting undue pressure, harassment, or behavior that undermines individuals’ emotional integrity and the law.»

Beyond financial compensation, the agreement requires Scotiabank to implement significant improvements in its practices, including reviewing «the guidelines of its processes and instructions for customer contact—both in emails and telephonic collection scripts—and reformulating abusive contractual clauses.»

As part of the penalties, Scotiabank will also have to pay a fine of 100 UTM (approximately $6,700,000) for fiscal benefit.

This case marks a milestone in the collective defense of consumers, while the ongoing collective lawsuit against Banco Itaú, identified in the same oversight, continues its judicial process.

The agreement with Scotiabank not only compensates tens of thousands of people but also sends a clear message to the industry regarding ethical and legal limits on collections, reaffirming the prohibition of harassment tactics and the obligation to strictly adhere to the thresholds established by consumer protection regulations.