On Wednesday, Bank of America agree to pay upwards of $700 million for deceptive credit card practices that enrolled customers in unnecessary and expensive services.
“Credit markets are important to consumers,” commented Christopher Paulos, an attorney with the Levin, Papantonio law firm and who practices with the firm’s business torts and securities litigation departments. “Aggressive and deceitful marketing strategies only serve to undermine people’s trust and confidence in the system while making unjustifiable profits for the banks and lenders.”
The settlement totals $727 million and will be divided thusly. $268 million will be used to reimburse 1.4 million customers who paid for services that were never delivered between 2010 and 2012. $459 million will be issued to the 1.5 million consumers that paid unauthorized charges for ID protection products from October 2000 through September 2011.
Additionally, Bank of America was a given a civil penalty from the Consumer Financial Protection Bureau (CFPB) and fined $20 million. The Office of the Comptroller of the Currency also fined the bank $25 million for its actions.
“We have consistently warned companies about illegal practices related to credit card add-on products,” said CFPB Director Richard Cordray. “Bank of America both deceived consumers and unfairly billed consumers for services not performed. We will not tolerate such practices and will continue to be vigilant in our pursuit of companies who wrong consumers in this market.”
The problem, allegedly, originated with the use of telemarketing programs that provided callers with a script to explain the services offered by the bank. That script was itself misleading, but often the telemarketers did not even bother to read the script to customers.
Bank of America issued its own statement regarding the settlement.
The CFPB has published the Court documents which are available here.