U.S. Bank to pay penalties, refunds for services sold but not provided

Federal regulators have ordered U.S. Bancorp to pay $57 million in restitution and penalties for charging customers for identity-protection and credit-monitoring services they never received.

The Consumer Financial Protection Bureau said Thursday that the company’s U.S. Bank subsidiary would refund $48 million to more than 420,000 customers.

Affected consumers who are still U.S. Bank customers will receive a credit to their accounts and those who are not will receive checks in the mail, according to the bureau. It said consumers are not required to take any action to receive their refunds.

The Minneapolis-based bank also was ordered to pay a civil penalty of $5 million to the bureau and a penalty of $4 million to the Office of the Comptroller of the Currency, the Treasury Department arm that regulates national banks.

U.S. Bancorp, based in Minneapolis, is the nation’s fifth-largest bank, with $263 billion in deposits. At last count by the Federal Deposit Insurance Corp., more than $32 billion in U.S. Bank deposits were in California, where its name crowns the tallest building in Los Angeles.

The bank apologized to customers in a statement that blamed the illegal billing practices on an outside vendor that provided identity-theft and credit-monitoring services. It said it severed its relationship with the vendor two years ago.

The bureau has emphasized that banks are responsible for the actions of third parties that provide financial services for hire.

“We have consistently warned companies about practices related to add-on products and will do what is necessary to prevent further harm to consumers,” said Richard Cordray, the bureau’s director.

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