Bank of America has agreed to shell out $772 million to settle allegations over how the megabank sold add-on products to its credit card customers.
The company's agreement with the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency does not include any admissions of wrongdoing, according to the consent order released by the CFPB. The settlement had been widely expected. In its August quarterly report, Bank of America acknowledged that it was in "discussions with regulatory authorities" over concerns about the sale and marketing of certain optional credit card products, and that it may have to pay restitution and penalties.
Bank of America must pay $727 million to affected consumers as well as $20 million to the CFPB's civil penalty fund and $25 million in penalties to the OCC, according to a press release from the CFPB.
But a press release from Bank of America says it is refunding about $738 million to customers in addition to the $45 million in penalties to regulators. It says it has "already issued refund payments to the majority of affected customers."
A Bank of America spokeswoman stressed that the company stopped offering these products well over a year ago. "We are committed to ensuring that our products and services are marketed and billed responsibly, including those marketed and billed by vendors," she said in an email.
This is the fifth settlement that the CFPB has made with a major bank over credit card add-on product offerings.
"We have consistently warned companies about illegal practices related to credit card add-on products," CFPB Director Richard Cordray said in the release. "Bank of America both deceived consumers and unfairly billed consumers for services not performed."
The CFPB alleges that Bank of America enrolled consumers in identity protection credit card add-on products that promised to monitor customer credit and alert consumers to potentially fraudulent activity. But in some cases, the company didn't have the necessary authorization to perform those credit monitoring services, so it was charging some customers for services it wasn't providing, the CFPB says.
The CFPB also says Bank of America made misleading statements about some of its products, known as "Credit Protection Plus" and "Credit Protection Deluxe."
Read Bankrate's 2012 blog post about Bank of America's decision to dump its add-on products.
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