On December 18, 2015, the Office of the Comptroller of the Currency (OCC) announced that it had entered into a consent order with a Rhode Island bank over allegations the bank engaged in unfair, deceptive, unsafe, and unsound acts and practices in violation of the Federal Trade Commission Act (Section 5). The alleged violations of Section 5 involved the bank’s identity protection and debt cancellation services.
When bank customers enrolled in the credit monitoring service, the bank requested personal identifying information and signed authorizations sufficient to permit the bank to retrieve consumers’ credit reports. Some consumers, however, did not immediately return the required forms. Although the bank could not provide credit monitoring services without the consumers’ signed authorizations, it still allegedly charged these consumers for credit monitoring. The bank also offered a debt cancellation service, which permitted consumers to cancel credit card debt upon the occurrence of certain qualifying events. According to the OCC, the bank failed to properly cancel the debt when a qualifying event occurred, or improperly calculated the cancellation amount. The OCC also alleged that the bank failed to reimburse consumers when they cancelled the service within 30 days of ordering, as required by the service contract. Finally, the OCC alleged the bank failed to provide sufficient “short form” disclosures regarding cancellation and refund rights to consumers who purchased the debt cancellation service. The Bank provided the disclosures in a post-purchase long-form disclosure, but not as an oral short-form disclosure at the time of purchase, as required by 12 CFR 37.6.
The Bank was ordered to reimburse all affected consumers, reform its quality control systems, and pay a $2,000,000 civil monetary penalty. The Bank did not admit any wrongdoing as part of the consent order.