Consumer Financial Protection Bureau today ordered Bank of America to pay $727 million in consumer relief for illegal credit-card practices.
CFPB says about 1.4 million consumers were affected by Bank of America’s deceptive marketing of its add-on products, and the financial institution illegally charged about 1.9 million consumer accounts for credit-monitoring and credit-reporting services that the consumers didn’t receive.
From 2010 to 2012, CFPB says, Bank of America promoted credit-card payment-protection products that it called Credit Protection Plus and Credit Protection Deluxe, both of which allowed customers to request that the bank cancel some credit-card debt in the event of certain life events, such as entering college, involuntary unemployment or retirement.
The misstatements that telemarketers made to consumers included assurance that the first 30 days of coverage were free when they weren’t, consumers just were agreeing to receive information about the protection services through the telemarketer’s call when they actually were signing up for the service through the call, exaggeration of how long a consumer could receive benefits, and claims that consumers would be entitled to a $25,000 death benefit by enrolling in Credit Protection Plus, when they wouldn’t receive such a benefit.
Further, Bank of America billed about 1.5 million consumers for identity-protection add-on products without authorization or before it received authorization, which CFPB says resulted in $459 million in harm to consumers.
In addition to the $268 million in refunds for deceptive marketing practices and $459 million for unlawful billing practices, Bank of America agreed to pay a $20 million penalty to CFPB’s civil-penalty fund.