Bank of America to pay $772 million for illegal credit card practices
The bank will pay $772 million in a settlement with bank regulators over allegations that it engaged in illegal credit card practices.
WASHINGTON -- Bank of America Corp. has agreed to refund customers $727 million and pay $45 million in fines for illegal credit card practices, according to a settlement with federal regulators announced Wednesday.
The refunds will go to as many as 2.9 million people who were deceived into signing up for products such as credit monitoring and identity theft protection or were improperly charged for such services, the Consumer Financial Protection Bureau said.
The action was part of a crackdown by the bureau on deceptive marketing, enrollment and billing practices related to such so-called add-on products by credit card companies. Bank of America is the fifth financial services company to be hit with fines and refund orders.
“Bank of America both deceived consumers and unfairly billed consumers for services not performed,” said Richard Cordray, the bureau’s director. “We will not tolerate such practices and will continue to be vigilant in our pursuit of companies who wrong consumers in this market.”
Bank of America agreed to the refunds and penalties without admitting or denying the allegations. In addition to the refunds, the bank will pay a $20-million civil penalty to the bureau and a $25-million civil penalty to the Office of the Comptroller of the Currency.
Bank of America said Wednesday that it had stopped marketing the products more than a year ago and already had paid the majority of refunds required under the agreement.
The practices dated to 2000.
In selling identity protection products such as “Privacy Guard,” “Privacy Source,” and “Privacy Assist,” the bank billed customers for the services without or before having the required authorization, the bureau said.
The bank improperly billed 1.5 million consumers about $459 million from October 2000 to September 2011, according to the bureau.
Also, from 2010 through 2012, Bank of America marketed two products, “Credit Protection Plus” and “Credit Protection Deluxe” that allowed customers to cancel some credit card debt if they lost their job or had some other hardships.
But the bureau said Bank of America deceived about 1.4 million customers into making about $268 million in payments by, among other things, improperly telling them the first 30 days of coverage were free or the benefits were greater than existed.
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