BofA paying $772M over selling credit card extras

Published on NewsOK Modified: April 9, 2014 at 3:19 pm •  Published: April 9, 2014
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WASHINGTON (AP) — Bank of America Corp. is paying $772 million in fines and refunds to settle regulators' accusations that it misled customers who bought extra credit-card products and illegally charged others for credit monitoring and reporting services they didn't receive.

The Consumer Financial Protection Bureau and the U.S. Office of the Comptroller of the Currency announced the agreement Wednesday with the second-largest U.S. bank.

It is the largest settlement over credit card "add-ons" won by federal regulators, who have been examining the marketing of the products by the financial industry for several years. It also marked the biggest refund amount ordered to date by the CFPB, a consumer watchdog agency created by Congress in the wake of the 2008 financial crisis. The agency has operated since mid-2011.

The regulators said about 2.9 million customers were affected in the Bank of America case. They say telemarketers made sales pitches for two credit-protection products that were misleading about their costs and benefits.

Charlotte, N.C.-based Bank of America neither admitted nor denied the allegations. The bank said in a statement it already has issued refunds to the majority of affected customers. Bank of America also said it stopped selling identity-theft protection products in December 2011, and terminated in August 2012 products offering debt relief for customers who lost their jobs or suffered other hardships.

The bank marketed two credit protection add-on services from 2010 through 2012 that allowed customers to ask for some credit-card debt to be cancelled if they lost their jobs or suffered other hardship. The regulators said the telemarketers often went off script to make sales pitches that were misleading and left out important information. For example, some customers were falsely led to believe they'd be entitled to a $25,000 "death benefit" by taking Credit Protection Plus. Rather than being automatically awarded as portrayed, customers had to complete an approval process to receive the benefit, the regulators said.

Bank of America also was accused of billing customers for several identity-theft protection products without getting their authorization or prior to getting it. Of the $772 million in refunds, about $459 million is going to some 1.5 million consumers who enrolled in the credit monitoring products and were said to be wrongly charged.

The bank also is paying a $20 million penalty to the CFPB and a $25 million penalty to the Office of the Comptroller of the Currency, a Treasury Department agency.

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