Bank of America (BAC) has ceased selling all payment protection plans to credit card customers, killing off a business line targeted by regulators.
The former internet landing page for the bank's "Credit Protection Plus" service has been shut down, with a simple notice that it is "no longer available." The Wall Street Journal first reported the news.
The move comes after a tentative $20 million settlement in July between Bank of America and attorneys representing payment protection customers. Under that deal, reached in a federal court in California's Northern District, Bank of America pledged to provide existing customers with several more months of free payment protection services. The bank also said in the settlement that it independently planned to stop offering payment protection plans for business reasons.
A Bank of America spokeswoman said Tuesday that the move was not in response to legal concerns about payment protection programs, but rather that it was the result of streamlining the company's business lines.
Bank of America's withdrawal comes at a key time for other banks offering similar products. Consumer advocates have reviled credit protection plans for years, alleging that the products are nearly worthless and foisted on customers who do not want them. But until the Consumer Financial Protection Bureau forced Capital One (COF) to pay a $210 million fine over its marketing of the products, payment protection appeared to be firmly entrenched at the big credit card lenders.
As is standard for many banks' payment protection plans, Bank of America's "Credit Protection Plus" and "Credit Protection Deluxe" were administered by a third party, in this case Central States Indemnity, which is owned by Berkshire Hathaway. In information released along with the Capital One settlement, the CFPB cited vendor relationships as a potential cause for concern.
On a different front, Bank of America also told the Huffington Post this week that it would no longer resurrect closed checking accounts if they received a wire transfer. The bank had previously been criticized by consumer advocates, who alleged that the bank was sometimes charging fees on "zombie" accounts that customers believed were shut down.