CFPB orders US bank to pay $37.5 million
The Consumer Financial Protection Bureau (CFPB) has launched a lawsuit against US Bank, claiming that the nation’s fifth-largest bank violated several federal laws by allowing employees to create fictitious accounts using customers’ personal data without their consent. consent.
The federal agency ordered the bank to pay a $37.5 million fine and reimburse the illegal charges to affected consumers, plus interest. The case reminds a law enforcement agency that the CFPB took on Wells Fargo in 2016, slapping it with a $100 million fine for similar actions.
Key points to remember
- The CFPB fined US Bank $37.5 million for misusing customer data to open credit accounts without their permission.
- The bank must also provide corrective measures to affected customers.
- The federal agency says the bank violated the Consumer Financial Protection Act, the Fair Credit Reporting Act, the Truth in Lending Act and the Truth in Savings Act.
US bank repeats Wells Fargo mistakes
It is common for banks and credit unions to encourage employees to sell their products and services to existing consumers. But at US Bank, the pressure and incentives got out of control, the CFPB says, to the point where sales targets were part of the job requirements.
As a result, bank employees have accessed customers’ credit reports and other personal information to open fictitious accounts in their names to respond to bank requests, and the CFPB says this has been happening for over of a decade.
The CFPB also found that the bank was aware of the fictitious accounts, which included checking and savings accounts, credit cards and personal lines of credit, but did not have procedures in place to detect and prevent unauthorized activity.
As a result, affected customers had to deal with unwanted accounts, negative items on their credit reports, loss of control over their information, and more.
In its investigation, the CFPB found that US Bank violated several federal laws, including the Consumer Financial Protection Act, Fair Credit Reporting Act, Truth in Lending Act, and Truth in Savings Act.
In addition to the $37.5 million fine imposed on the CFPB, which will go into the agency’s victim relief fund, the bank must also reimburse all fees and other charges illegally charged, plus interest.
The US Bank scheme is similar to one Wells Fargo engaged in for several years, resulting in a $100 million fine from the CFPB and a $3 billion settlement with the Department of Justice, the Securities and Exchange Commission and two US law firms.