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Bank of America to pay $772 million in settlement

By Michael Corkery & Jessica Silver-Greenberg

New York Times

POSTED:
LAST UPDATED: 06:21 p.m. HST, Apr 09, 2014


Bank of America has been ordered to pay roughly $772 million in refunds to customers and fines to federal regulators to settle allegations that the bank used deceptive marketing and billing practices involving credit card products.

The Consumer Financial Protection Bureau said that Bank of America "illegally charged" its customers for credit monitoring and credit reporting services that were not received.

As part of a consent order with the agency announced Wednesday, the bank was ordered to give refunds to more than 1 million customers who purchased these add-on products for their credit cards.

The bank must also pay a $20 million fine to the Consumer Financial Protection Bureau and $25 million to the Office of the Comptroller of the Currency.

Some of the misleading practices, according to regulators, included the bank's telemarketers telling customers that the first 30 days of were free when, in fact, customers were charged.

The bank also misled customers to believe that they were merely agreeing to receive additional information about the add-on services. But thebank was actually enrolling these consumers in the products during these calls, the consumer protection agency said.

The products allowed customers to request that Bank of America cancel some amount of credit card debt in case they lost their job or became disabled.

"Bank of America both deceived consumers and unfairly billed consumers for services not performed," said Richard Cordray, the director of the consumer agency. "We will not tolerate such practices and will continue to be vigilant in our pursuit of companies who wrong consumers in this market."

The Consumer Financial Protection Bureau also cited Bank of America for billing consumers for credit protection services that they never fully received.

In some cases, these practices caused customers to exceed their monthly credit limits, resulting in additional costs, the agency said.

The agency said Bank of America engaged in these billing practices from 2000 to 2011, affecting 1.9 million customers.

In a statement, the bank said it had already refunded money to a "majority" of the affected customers.

The action against Bank of America on Wednesday is the latest by the Consumer Financial Protection Bureau, which has taken aim at a number of banks for selling credit card products to consumers that they never wanted and could not use. In fact, the agency's first enforcement action against the financial industry centered on this issue, when the federal regulator demanded in 2012 that Capital One reimburse $150 million to more than 2 million consumers.







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bsdetection wrote:
C'mon conservatives, tell us again about the need for bank deregulation.,
on April 9,2014 | 08:28PM
honokai wrote:
If only it was as simple as putting people in charge of running the government that wear the correct label. Then all will be well.
on April 10,2014 | 12:22AM
joeglick wrote:
Just fining them is not the answer. How about throwing someone in prison to send a message, that you can't keep buying yourself out of prison.
on April 10,2014 | 05:39AM
inHilo wrote:
Agree!
on April 10,2014 | 06:56AM
cojef wrote:
Share holders should petition management to shape up and get it right and refuse take their annual bonuses equal to the amount of the fines. Why should the stockholders have to bears such indignities. Board of Directors also be made accountable. This is another example why bigness is bad, just like big Government.
on April 10,2014 | 08:30AM
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