- Posted April 13, 2014 by
This iReport is part of an assignment:
CFPB Fines Bank of America $727 Million for Illegal Credit Card Practices
The bank will pay financial relief to millions of consumers harmed by deceptive marketing and unfair credit card billing practices.
On April 9, 2014, the Consumer Financial Protection Bureau ordered Bank of America, N.A. and FIA Card Services, N.A. to provide an estimated $727 million in relief to consumers harmed by practices related to credit card add-on products.
Roughly 1.4 million consumers were affected by Bank of America’s deceptive marketing of their add-on products, according to the CFPB. Bank of America also illegally charged approximately 1.9 million consumer accounts for credit monitoring and credit reporting services that they were not receiving. Bank of America will pay a $20 million civil money penalty to the CFPB.
“We have consistently warned companies about illegal practices related to credit card add-on products,” said CFPB Director Richard Cordray. “Bank of America both deceived consumers and unfairly billed consumers for services not performed. We will not tolerate such practices and will continue to be vigilant in our pursuit of companies who wrong consumers in this market.”
From 2010 through 2012, Bank of America actively marketed two credit card payment protection products, “Credit Protection Plus” and “Credit Protection Deluxe.” Both products allowed customers to request that Bank of America cancel some amount of credit card debt in the event of certain hardships like involuntary unemployment or disability and certain life events, such as entering college or retirement.
Bank of America also misled consumers about the cost of the first 30 days of coverage; the enrollment process for credit protection products; and the benefit of credit protection products, according to the bureau.
The company also engaged in unfair billing practices by enrolling consumers in identity protection credit card add-on products and billing them for services they did not receive, according to the CFPB.
Bank of America must end those practices and is prohibited from marketing any credit protection or credit monitoring add-on products until it submits a compliance plan to the CFPB.
This enforcement action is the result of the CFPB’s investigation into Bank of America’s payment protection products and of work started by the Office of the Comptroller of the Currency regarding the unfair billing practices of the identity protection products, which the CFPB joined. The OCC is ordering Bank of America to pay $25 million in civil money penalties for the unfair billing practices.