Bank of America ordered to pay nearly $800 million for illegal credit card practices
Today, Bank of America was ordered by the Consumer Financial Protection听Bureau to refund $727 million to consumers who were deceived by the bank's听marketing of credit card payment protection programs and others who were听charged for credit monitoring services they never fully authorized. This makes the bank the fifth major credit card issuer to be financially penalized for听these types of credit card practices.
听
听In addition to the refunds, the Office of the Comptroller of the Currency fined Bank of听America $25 million in civil penalties for unfair billing practices. The听bank also has to pay $20 million to the CFPB Civil Penalty Fund.
听The CFPB issued a听听that showed over 1.4 million consumers were听deceived by the marketing of two credit card payment protection programs.听These products, called "Credit Protection Plus" and "Credit Protection听Deluxe," allowed customers to request the bank cancel some credit card debt听in the event of certain hardships like disability and involuntary听unemployment, or certain life events such as retirement or entering college.听 The CFPB found that the telemarketing practices used in selling these听products were misleading. This took place between 2010 and 2012.
听
听Bank of America must provide approximately $268 million in refunds to the听more than 1.4 million customers affected by these deceptive marketing听practices.
听
听In addition, Bank of America enrolled consumers in programs to monitor their听credit and alert them to potentially fraudulent activity. These programs听were known as "Privacy Guard," "Privacy Source," and "Privacy Assist." The听bank began charging customers fees and interest without or before they听received proper authorization from consumers.
听
听Bank of America must pay $459 million to roughly 1.9 million customer听accounts, representing approximately 1.5 million consumers who enrolled in听the credit monitoring products and were charged while the bank did not听perform all of the promised services.
听
听"We have consistently warned companies about illegal practices related to听credit card add-on products," said CFPB Director Richard Cordray in a听. "Bank of America both deceived consumers and unfairly billed听consumers for services not performed. We will not tolerate such practices听and will continue to be vigilant in our pursuit of companies who wrong听consumers in this market."
Federal regulators have been cracking down on deceptive credit card practices and marketing from many of the biggest card issuers in the United States in recent years.
, the Bureau ordered JPMorgan Chase to refund $309 million听to credit card customers that were improperly billed for add-on products.听The CFPB and the Office of the Comptroller of the Currency concluded that听2.1 million cardholders were billed for services they never received. These听add-on products included identity theft protection and fraud monitoring.听Chase charged monthly fees ranging from $7.99 to $11.99. The investigation听found that the company even charged customers for these services before the听customers gave any authorization.
听
听In October 2012, American Express was ordered to refund $85 million to听
听customers and pay $27.5 million in civil penalties to settle regulators'听accusations that the company violated a number of consumer protection laws.听The issuer led customers to believe they would receive $300 for signing up听for the Blue Sky credit card. The customers who fulfilled the conditions of听the offer never received the money. In addition, American Express was听accused of making false statements to persuade customers to pay off their听credit card balances. The regulators said customers were told that if they听agreed to pay off part of their debt, the remaining portion of the balance听would be forgiven.
听
听In September 2012, the CFPB and the FDIC announced that Discover had to听refund $200 million to their credit card customers for pressuring听cardholders into buying expensive payment protection and credit monitoring听services. Discover also had to pay a $14 million fine.
听
听In July 2012, Capital One agreed to pay up to $150 million to two听million consumers as a result of the bank's telemarketers deceptively听pushing credit monitoring and payment protection services. In addition,听Capital One agreed to pay fines of $25 million to the CFPB and $35 million听to the Office of the Comptroller of the Currency.
听鈥撎鼴ill Hardekopf听is founder of听, an online credit-card information site.
