Consumer Finance Insights
August 29, 2016

CFPB and National Bank Reach $32.25 Million Settlement Regarding Credit Card Add-On Products

On August 25, 2016, the Consumer Financial Protection Bureau (CFPB) announced an order against a national bank that will require the bank to pay $32.25 million in consumer relief and civil penalties based on practices relating to credit card add-on products.  These practices allegedly violated sections 1031 and 1036(a)(1)(B) of the Consumer Financial Protection Act (CFPA), 12 U.S.C. §§ 5531 and 5536(a)(1)(B).

According to the order, the bank deceptively marketed debt cancellation add-on products during the telephonic activation of consumers’ credit cards.  CFPB further asserts that the bank sold these products to consumers without making it clear that the consumers were purchasing a product, and that the bank failed to disclose certain consumer’s ineligibility for these products and made cancellation of the products difficult for consumers.  The order also alleges that the bank sold consumers credit monitoring services that they did not receive and that it engaged in unfair billing practices.  The unfair billing practices are alleged to have occurred between 1997 through 2012, and the deceptive practices between 2010 and 2012.

The order requires that the bank cease its unfair billing practices and repay $27.75 million in refunds and additional relief to consumers affected by these practices.  The bank has also been ordered to pay a $4.5 million civil money penalty to the CFPB’s Civil Penalty Fund.

CFPB coordinated with the Office of the Comptroller of the Currency (OCC), which separately ordered that the bank pay restitution and a $3 million civil money penalty against the bank in relation to its unfair billing practices.  Additional information regarding the OCC’s order can be found in a related post from the Consumer Finance Enforcement Watch.