The Consumer Financial Protection Bureau has ordered Bank of America and FIA Card Services to pay about $727 million in relief to consumers harmed by practices related to credit card add-on products.
About 1.4 million consumers were affected by Bank of America’s deceptive marketing of their add-on products. The bank also illegally charged about 1.9 million consumer accounts for credit monitoring and credit reporting services that they weren’t receiving.
“We have consistently warned companies about illegal practices related to credit card add-on products,” said Richard Cordray, director of the bureau. “Bank of America both deceived consumers and unfairly billed consumers for services not performed.”
Deceptive marketing
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 case of hardships such as unemployment or disability and life events such as entering college or retirement.
The bureau found that the telemarketing scripts Bank of America used for these products contained mistakes. In addition, telemarketers often went off script to make sales pitches that were misleading and left out important information.
Specifically, Bank of America misled consumers about the cost of first 30 days of coverage, the enrollment process, and the benefits of credit protection products.
Unfair billing practices
Bank of America also enrolled consumers in identity protection credit card add-on products – called “Privacy Guard,” “Privacy Source,” and “Privacy Assist” – that promised to monitor customer credit and alert consumers to possible fraudulent activity.
Bank of America billed consumers for these products without or before having the authorization to perform the credit monitoring and credit report retrieval services.
Enforcement action
The bureau’s order requires that Bank of America:
- Stop engaging in illegal practices and end unfair billing practices.
- Repay affected consumers: Bank of America must provide about $268 million in refunds and additional relief to more than 1.4 million customers affected by deceptive marketing practices. It also must pay about $459 million to an estimated 1.9 million customer accounts, representing about 1.5 million consumers who enrolled in the credit monitoring products and were charged while Bank of America didn’t perform all of the promised services.
- Conveniently repay consumers: Bank of America has completed reimbursement to consumers for the unfair billing practices relating to the identity protection products. For the credit protection products, if the consumers are still Bank of America customers, they’ll receive or already have received a credit to their accounts. If they’re no longer a Bank of America credit card holder, they’ll receive or already have received a check in the mail or have charged-off balances reduced by the amount they were charged in fees. Consumers aren’t required to take any action to receive their credit or check.
- Pay a $20 million penalty.
The enforcement action is the result of the bureau’s investigation into Bank of America’s payment protection products and work started by the Office of the Comptroller of the Currency on the unfair billing practices of the identity protection products, which the bureau joined.
The OCC is separately ordering restitution from Bank of America for the unfair billing practices. The OCC is ordering Bank of America to pay $25 million in penalties for the unfair billing practices, in addition to those ordered by the bureau.
