Bank of America fined $783 mn tricking for customers on credit card add-on products
10 April 2014
Bank of America Corp was yesterday fined $783 million by US regulators for misleading millions of customers into buying costly and unnecessary credit card add-on products.
The Consumer Financial Protection Bureau (CFPB) and the US Office of the Comptroller of the Currency (OCC) announced the agreement yesterday with the North Carolina-based bank.
Around 2.9 million consumers will receive or have already received up to $727 million in refunds for fees they paid for these products and services as well as additional redress.
The regulators said that the fine was imposed for unfairly billing consumers for services relating to identity theft protection ''add-on'' products and for using deceptive marketing and sales practices for credit protection ''add-on'' products.
Around 1.5 million consumers purchased Bank of America's ''identity theft protection'' products like Privacy Guard, PrivacySource, and Privacy Assist, and were improperly billed for services that were not rendered.
As a result, consumers paid at least $459 million in fees, interest, and over-limit charges for these products without receiving full services.
The bank will pay $268 million to reimburse nearly 1.4 million consumers were charged a fee between 1 October 2010 and 31 March 2013 for ''credit protection'' products like Credit Protection Plus and Credit Protection Deluxe and either did not activate benefits or who had a request for benefits denied.
The bank is also paying a $20 million penalty to the CFPB and a $25 million penalty to the OCC,
Bank of America said in a statement, that it had ''stopped marketing identity theft protection products in December 2011 and credit card debt cancellation products in August 2012.''
( See: Consumer Financial Protection Bureau's statement: CFPB Orders Bank Of America To Pay $727 Million In Consumer Relief For Illegal Credit Card Practices)