Bank of America has agreed to pay an estimated $727 million in restitution to 1.4 million consumers the Consumer Financial Protection Bureau says were harmed by its deceptive marketing of credit card add-on products. The bank will also pay $20 million to the CFPB's Civil Penalty Fund.

The CFPB's investigation into Bank of America's payment protection products builds upon work started by the Office of the Comptroller of the Currency regarding unfair billing practices for identity protection products. The OCC is separately ordering the bank to pay $25 million in civil penalties.

According to the CFPB, from 2010 through 2012, Bank of America actively marketed credit card payment protection products that allowed customers to cancel some of their debt in the event of hardships (unemployment or disability), or specified life events (entering college or retirement). The CFPB says the telemarketing scripts for these products contained misstatements and sales people often went off script with pitches that were misleading and omitted pertinent information.

For example, telemarketers allegedly misled consumers about the enrollment process for these products,  telling them on calls they were merely agreeing to receive additional information when, in reality, they  were being enrolled and charged. Pitches also misrepresented the benefits purchasers would receive, including a $25,000 death benefit that was not actually included with the product.

Bank of America also sold identity protection credit card add-on products that promised to monitor customer credit and alert them to potentially fraudulent activity. The bank billed consumers for these products before having the authorization necessary to perform the credit monitoring and credit report retrieval services.

Bank of America ended the marketing and sales of credit protection products in August 2012, canceled all existing accounts as of September 2013, and provided six months of no-cost coverage to consumers enrolled as of March 2013. It stopped marketing the identity protection products in approximately December 2011.

The CFPB's order prohibits Bank of America from marketing any credit protection or credit monitoring add-on products until it submits a compliance plan. The bank also agreed to review and, if necessary, improve its policies to ensure that it does not commit unlawful acts in the future.

The agency has been active since its creation in seeking out similar problems involving credit card add-ons at banks. Past actions include fining JPMorgan Chase $389 million; American Express agreeing to a total of $27 million in civil penalties and $85 million in restitution to more than 250,000 consumers; Discover bank agreeing to a $214 million settlement; an, with its first ever enforcement action, ordering Capital One Bank to refund approximately $140 million to customer, pay a $25 million penalty, and develop a compliance plan for how "add-on" products are sold.

 

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