Bank of America must reimburse customers to the tune of $727 million for illegal credit card practices, according to the Consumer Financial Protection Bureau’s (CFPB) recent ruling. They must also pay a $20 million penalty to the CFPB’s Civil Penalty Fund.
The CFPB investigation found that Bank of America purposely deceived customers about credit card add-on products, such as credit monitoring service and credit protection policies. Telemarketer scripts used to sell these products had misleading statements in them.
The CFPB said telemarketers made non-scripted sales pitches as well, leaving out important information about the products and purposely deceiving customers. They estimate that more than 1.4 million Bank of America cardholders were subject to these illegal marketing practices.
Charged for products under false impressions
Programs called “Credit Protection Plus” and “Credit Protection Deluxe” promised to let customers request a cancellation of part of their debt in case of unemployment, disability or other major life events like retirement or sending a family member to college. They also said that the programs would entitle them to an automatic $25,000 death benefit upon enrollment.
In reality, all these benefits were subject to a successful submission and approval process. They were not automatic, nor were they guaranteed. Customers were charged for enrolling in these programs after being lied to by telemarketers, said the CFPB in its statement.
Customers also were led to believe that they could try these programs for a free 30-day trial period. However, when they agreed to this, they were automatically enrolled and their cards were charged unless they called to cancel within 30 days. Those who did cancel within this time period were reimbursed for all fees.
Some telemarketers told customers that there were further steps to take after the call in order to enroll in these programs. They said customers were simply agreeing to be sent more information about the products—when in fact, they were enrolling the customers during the call.
Identity protection and unfair billing
Other add-on products included “Privacy Guard,” “Privacy Source,” and “Privacy Assist.” These were meant to protect customers from credit card fraud. But in order for Bank of America to monitor customers’ credit for fraud, they had to gain authorization from the consumer to access their credit report. The CFPB said that Bank of America began billing consumers for these services without getting that authorization. Therefore, customers were paying for a service they were not receiving.
As a result of these illegal add-on practices, customers were sometimes charged fees that caused their credit card balances to exceed the limit, resulting in more fees. Interest was then charged on those fees, compounding the damage to consumers.
This is not the first time a credit card company has been found to be using deceptive practices to enroll cardholders in add-on products. Last year, Chase had to pay $309 million in refunds for similar illegal practices.