CFPB, OCC Force U.S. Bank to Pay $57M Over Add-On Products

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WASHINGTON –Regulators fined U.S. Bank $57 million in penalties and restitution on Thursday to settle allegations that the $367 billion-asset bank unfairly marketed and charged add-on products to consumers.

The Office of the Comptroller of the Currency and the Consumer Financial Protection Bureau issued separate orders Thursday against U.S. Bank in Cincinnati for illegally charging more than 420,000 consumer accounts for identity theft add-on products through a vendor. The OCC’s order includes $47.9 million in restitution and a $4 million civil money penalty. The CFPB also fined the bank an additional $5 million civil money penalty and included the same amount of restitution to satisfy both orders.

“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 press release. “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.”

The CFPB’s order said U.S. Bank had a service provider, Affinion, who enrolled bank customers in identity protection add-on products which claimed to monitor the consumers’ credit and alert them of any fraudulent activity. Customers must authorize in writing for a company to provide credit monitoring services but the CFPB said U.S. Bank instead charged the customers as soon as they enrolled. This resulted in the bank being cited for unfair billing and charging for services never received in some cases.

The OCC and CFPB ordered the bank to pay the $48 million in restitution to affected consumers who signed up for identity theft protection from February 2003 (or January 2004 in the CFPB’s order) to August 2012. Both orders also require U.S. Bank to ramp up its vendor oversight when it comes to add-on products and submit to a third-party management program plan and compliance plan to the regulators.

A spokesman for U.S. Bank said in a statement that the institution regrets "that errors occurred when our customers purchased credit monitoring and identity theft products from a third-party vendor, Affinion and its subsidiary Trilegiant, and that some of our customers did not receive the full benefit of those products."

"As soon as we became aware of the issues with Affinion, we took swift action to protect our customers, and ultimately, discontinued our relationship with Affinion approximately two years ago," he said. "We will be compensating customers who did not receive full services from Affinion, and providing our apology."

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