The Consumer Financial Protection Bureau (CFPB) has ordered Bank of America, N.A. and FIA Card Services, N.A. to provide an estimated $727 million in relief to consumers harmed by practices related to credit card add-on products. Roughly 1.4 million consumers were affected by Bank of America’s deceptive marketing of their add-on products. Bank of America also illegally charged approximately 1.9 million consumer accounts for credit monitoring and credit reporting services that they were not receiving.
According to CFPB Director Rich Corday, “Consumers were most often misled during inbound and outbound telemarketing calls. When customers called Bank of America, whether to activate a card or to inquire about a balance transfer, they would often reach a telemarketer who would try to sell them payment protection products.”
From 2010 through 2012, Bank of America actively marketed two credit card payment protection products, “Credit Protection Plus” and “Credit Protection Deluxe.” Both products allowed customers to request that Bank of America cancel some amount of credit card debt in the event of certain hardships like involuntary unemployment or disability and certain life events such as entering college or retirement. The Bureau found that the telemarketing scripts Bank of America used for these products contained misstatements. Additionally, telemarketers often went off script to make sales pitches that were misleading and that omitted pertinent information. Over 1.4 million card members were affected by this deceptive marketing.
Among other things, Bank of America misled consumers about:
Cost of first 30 days of coverage: Bank of America led some consumers to believe that the first 30 days of coverage were free of charge when, in fact, by enrolling, consumers were agreeing to purchase the credit protection products. Consumers would begin incurring charges unless they cancelled within an initial 30-day review period, in which case any fees previously paid would be reimbursed.
Enrollment process for credit protection products: Bank of America misled some consumers about the enrollment process for these products, telling them that there were additional steps to enroll in or purchase the products after the telemarketing call or that, on the call, they were merely agreeing to receive additional information. In reality, Bank of America was enrolling these consumers in the products during these calls and then charging consumers for the products.
Benefits of credit protection products: Bank of America misrepresented the benefits consumers could receive from the products, telling consumers they could receive benefits for a longer period of time than was allowed under the terms and conditions of the credit protection products. Bank of America also led some consumers to believe they would be entitled to a “$25,000 death benefit” by enrolling in Credit Protection Plus when that was not the case. Telemarketers misled consumers by implying the benefits of these products were automatic upon notice of a qualifying event when, in fact, benefits were contingent on the successful completion of a benefit request submission and approval process.
Bank of America also enrolled consumers in identity protection credit card add-on products, known as “Privacy Guard,” “Privacy Source,” and “Privacy Assist,” that promised to monitor customer credit and alert consumers to potentially fraudulent activity. Under federal law, in order for Bank of America or its vendors to obtain consumers’ credit information, the consumers generally must authorize access to credit information. Bank of America, however, billed consumers for these products without or before having the authorization necessary to perform the credit monitoring and credit report retrieval services. As a result, the company:
Billed consumers for services they did not receive: Bank of America illegally charged customers for these products as soon as they enrolled even if they were not actually receiving the services yet.
Unfairly charged consumers for interest and fees: The unfair monthly fees that customers were charged sometimes resulted in customers exceeding their credit card account limits, which lead to additional fees for the customers. Some consumers also paid interest charges on the fees for services that were never received.
Illegally charged approximately 1.9 million consumer accounts: Bank of America engaged in these unfair billing practices from at least October 2000 through September 2011. About 1.9 million consumer accounts were improperly billed product fees while not receiving the full product services, affecting roughly 1.5 million consumers. The unfair billing practices resulted in about $459 million in harm to consumers.
Failed to provide product benefits: Consumers may have been under the impression that their credit was being monitored for fraud and identity theft, when, in fact, these services were either not being performed at all, or were only partially performed.
Consumers who are still with Bank of America will receive credits to their account if they have not already. Those who are no longer with Bank of America have received or will be mailed checks for the appropriate amounts.