Bank of America has complied to US regulators and agreed to settle charges that it collected by deceiving customers. The US regulators held Bank of America Corp. Responsible for sales of theft protection insurance and generating money by selling credit card debt cancellation.
Before Bank of America, similar charges were brought against four other banks. Those banks also faced allegations of manipulating credit card add-ons. It’s important to mention that identity theft protection and debt cancellation are add-on products. These services don’t come directly with credit cards.
The agreement would cost Bank of America a whopping $783 million, out of which $738 million would be refunded to the consumers and another $45 million needs to be paid a penalty. The deal was settled with federal regulators. The Consumer Financial Protection Bureau was one of the regulators.
A representative of CPFB called Richard Cordray said, “Bank of America both deceived consumers and unfairly billed consumers for services not performed. We will not tolerate such practices and will continue to be vigilant in our pursuit of companies who wrong consumers in this market…”
According to CPFB, there are nearly 1.4 million customers who were affected due to the deceptive policies are taken by the Bank of America. Around 1.9 million customer accounts were unlawfully charged for credit monitoring and also for credit reporting services when they were not really receiving those services.
To compensate for the 1.9 million consumers, Bank of America was fined $25 million. The restitution amount the bank would have to pay is $459.4 million. The fine amount, according to the authorities deal with, “scope and duration of the violation and financial harm to consumers from the unfair practices.”
Before this announcement, the CEO of Bank of America namely Brian T. Moynihan spent over $50 billion for the reimbursement of the victims of sketchy mortgage schemes. With the current settlement, Bank of America moves past another legal hurdle. The Office of Comptroller of the Currency gave an order to the bank. In the order, the comptroller said banks should, “improve governance of third-party vendors associated with ‘add-on’ consumer products and submit a risk management program.”
Earlier, the FDIC sued Citigroup and Credit Suisse and now Bank of America jumps into the bandwagon. As a result of the lawsuits, the credit add-on products have been put on hold.