Earlier this month, the Consumers Financial Protection Bureau charged Bank Of America and FIA Card Services for billing cardholders for services they did not receive or using improper methods to sell products to consumers. Services included identity theft protection and credit protection add-on products.
“Central to our mission here at the Consumer Bureau is the duty to identify and root out unfair, deceptive, and abusive practices in financial markets,” said CFPB Director Richard Cordray in a statement. In addition to the fine, Cordray added that CFPB is also ordering Bank of America to refund customers up to $727 million for the unfair fees they paid for the additional services and products.
Nearly 3 million consumers have been or will be refunded by Bank of America. The Bureau notes that customers who have been affected by the illegal credit practices should be notified directly by the bank and requires no action on behalf of the consumer in order to receive the refund. However, if consumers aren’t sure whether they hold the right to a credit, the Bureau advises consumers to call Bank of America directly.
“In the two years these payment protection products were on the market, they generated hundreds of millions of dollars in revenue for Bank of America. Meanwhile, about 1.4 million consumers were subjected to these deceptive marketing tactics,” stated Cordray. He went on to say that CFPB also found that customers were paying as much as $12.99 a month for additional identity theft protection services.
Companies are required to obtain a customer’s authorization before billing their credit information, but customers were billed for services before Bank of America received the customer’s permission. About 1.9 million accounts were billed this way and didn’t provide consumers with the full services they purchased, which affected nearly 1.5 million customers.
Consumers who were registered for the credit protection add-on for less than one year, requested benefits that were denied or closed, or who complained directly to the Bureau, will receive a refund for fees that were charged between October 1, 2010 and March 31, 2013. As for customers who were enrolled for a year or over will receive a credit of 300 days of fees that were charged between the same period.
In addition, affected credit protection customers will also see a decrease in charged-off balances as well as free credit protection services for a period of six months for consumers who had the services since March 2013. Bank of America has already reimbursed the customers who were enrolled in the identity theft protection services.
Cordray added that in addition to the $727 million penalty, Bank of America has also been charged with $20 million in civil fines.
“Together, we will continue to be vigilant in pursuit of anyone who deceives or mistreats consumers,” said Cordray in a press release. “Through the five enforcement actions the Bureau has taken to date on credit card add-on products, we have now put nearly $1.5 billion back into consumers’ pockets. We intend to continue cleaning up this market as necessary to ensure that consumers are treated fairly.”