to pay $727 million to consumers over credit card practices
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[April 10, 2014]
By Emily Stephenson and Peter
WASHINGTON (Reuters) — Bank of America
agreed to pay nearly $800 million in fines and restitution to settle
allegations of deceptive marketing and unfair billing involving
credit card products, U.S. regulators said on Wednesday.
The Consumer Financial Protection Bureau and Office of the
Comptroller of the Currency said they had ordered the bank to pay
$727 million in relief to consumers to resolve problems with add-on
products providing identity theft and payment protection products.
The bank must also pay fines of $20 million to the bureau $25
million to the OCC.
"We have consistently warned companies about illegal practices
related to credit card add-on products," bureau Director Richard
Cordray said in a statement. "We will not tolerate such practices
and will continue to be vigilant in our pursuit of companies who
wrong consumers in this market."
The consumer bureau said the bank had misled roughly 1.4 million
people about the cost of two credit card payment protection
products, which allow consumers to suspend minimum card payments if
they lose their job or suffer a severe illness, and the amount of
time they would receive benefits from them.
The bank also billed customers for identity protection products
before they received them and did not provide some fraud-monitoring
services consumers thought they were buying, regulators said. About
1.9 million people were unfairly billed, the consumer bureau said.
Bank of America neither admitted nor denied wrongdoing, the bureau
Bank of America said in an emailed statement that it had stopped
marketing its identity theft protection products in December 2011
and its payment protection products in August 2012. The bank has
also already issued refund payments to most customers who were
affected, the statement said.
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In recent years, the bureau has been cracking down on credit card
companies offering payment protection, credit score tracking and
other add-on products. The settlement with Bank of America is the
bureau's fifth such case, Cordray said.
Since 2012, Capital One Financial Corp, American Express Co,
Discover Financial Services and JPMorgan Chase & Co all have paid
fines to resolve allegations of unfair practices involving such
(Reporting by Emily Stephenson and Peter Rudegeair;
Franklin Paul and Lisa Von Ahn)
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