BofA to pay $727 million to consumers over credit card practices

WASHINGTON Wed Apr 9, 2014 4:49pm EDT

A sign for a Bank of America office is pictured in Burbank, California August 19, 2011. REUTERS/Fred Prouser

A sign for a Bank of America office is pictured in Burbank, California August 19, 2011.

Credit: Reuters/Fred Prouser

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 said.

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.

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 products.

(Reporting by Emily Stephenson and Peter Rudegeair, Editing by Franklin Paul and Lisa Von Ahn)

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Comments (4)
brotherkenny4 wrote:
Sounds like a lot of money. Is it? Is it a lot compared to what they profited from their fraud? Probably not. That how our government typically makes it seem like they are for us, when in fact they are for the corporations. They wait a long time and then only fine companies a small percentage of what the corporation made in ill got gains. This is how you know we are a facist corporate nation and neither the dems or the reps are any different.

Apr 09, 2014 12:39pm EDT  --  Report as abuse
JohnReutersF wrote:
Only one comment on this? Unless I am one of the first to see this article, that very apathy helps to explain why B of A even exists anymore. B of A has been screwing its customers at least since I was a college student – almost 30 years ago. I swore off B of A ever since, and ever since I have continued to be amazed that people still keep their money with them. The initial mortgage fiasco, subsequent unwarranted foreclosures, the Merill Lynch con job; and now the credit card scam. And these are just the bigger sins and also only the ones that the public has been made aware of. So – will someone please explain to me WHY you would ever be a customer of B of A, in any way, shape or form? Why would you get a mortgage from them? Why would you bank with them? Why would you get a credit card through them? And why oh why would you be a stock holder of B of A? Why would you even work for such a truly deviant corporation? Anyone? Actually, that goes for Chase, Citi Corp., Wells Fargo ……. Isn’t it time to seek out a credit union, that will actually give you interest on your checking account? Come on people, no one is ever going to go to jail for the sins of corporations – they own the law enforcement agencies and politicians. If that is not clear by now, you are an idiot. But you can destroy these corporations – stop investing in them and stop supporting them as customers. And don’t let any change in demeanor cause you to reconsider. Stop supporting these corporations until they are mere foot notes in history. Squash them.

Apr 09, 2014 4:15pm EDT  --  Report as abuse
herbxerx wrote:
I bet BofA sets aside a predetermined percentage (five or ten percent?) of their profits from fraudulent practices just for these fines.

Apr 09, 2014 7:53pm EDT  --  Report as abuse
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