CFPB Orders U.S. Bank to Refund $48 Million Over Illegal Add-Ons

The Consumer Financial Protection Bureau (CFPB) on Thursday ordered U.S. Bank to provide $48 million in relief to consumers the agency believes were harmed by illegal billing practices related to credit card “add-on” products.

The CFPB alleges U.S. Bank customers were unfairly charged for certain identity protection and credit monitoring services that they did not receive, but were sold and advertised to them as “add-on products” for credit cards and other bank products such as mortgage loans and checking accounts. 

For the action, which affected approximately 420,000 consumers, the CFPB orders U.S. Bank to pay a $5 million civil money penalty to the Bureau and a $4 million penalty to the Office of the Comptroller of the Currency.

“Today’s action will provide $48 million in relief to U.S. Bank customers who were illegally charged for identity protection services they did not receive,” said CFPB Director Richard Cordray in a written statement. “We have consistently warned companies about practices related to add-on products and we will do what is necessary to prevent further harm to consumers.”

In its Consent Order, the CFPB states U.S. Bank’s service provider enrolled bank customers in identity protection add-on products that promised to monitor consumers’ credit and alert them to potentially fraudulent activity. The programs, known as “Privacy Guard” and “Identity Secure,” were marketed by U.S. Banks and administer by its third-party vendor. 

For a company to provide credit monitoring services, it must obtain the customer’s written authorization, however, the CFPB alleges U.S. Bank customers were charged for these products as soon as they enrolled, without the necessary authorization to perform the services.

As a result, customers were billed for services they did not receive, and unfairly incurred charges for interest and fees, which in some cases resulted in customers exceeding their credit card account limits. 

The order against U.S. Bank marks the seventh such action the CFPB has taken to address what it deems unfair billing practices in pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Written by Jason Oliva

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