U.S. Bancorp Ordered To Repay $48 Million To Customers

U.S. Bancorp Ordered To Repay $48 Million To Customers

U.S. Bancorp (NYSE:USB), headquartered in Minneapolis, has been ordered to refund $48 million to customers, as well paying a $5 million penalty to the CFPB and $4 million to the Treasury Department.

The CFPB was created after the financial crash to protect consumers, and has ordered refunds of $4.6 billion to over 15 million customers since 2011.

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A continued crackdown on illegal practices

Historically, Bank of America Corp (NYSE:BAC) received the largest sanction, being told to repay $727 million due to illegal credit card marketing and billing. CFPB Director Richard Cordray said that his organization has “consistently warned companies about practices related to add-on products and we will do what is necessary to prevent further harm to consumers.“

The U.S. Bancorp (NYSE:USB) action is the seventh undertaken by the CFPB related to credit card add-on products. The bank overcharged 420,000 customers between 2004-2012, charging them for fraud and identity theft protection services without actually providing security.

The problems arose because U.S. Bank customers were charged for the services as soon as they enrolled, without their written authorization, which is generally necessary in order to provide credit monitoring services.

The U.S. Bancorp response

The credit monitoring programs, sold under the names “Privacy Guard” and “Identity Secure”, were marketed by the bank but administered by Affinion, a third party vendor.

A U.S. Bancorp (NYSE:USB) statement expressed regret at the errors and promised that the bank “will be compensating customers who did not receive full services from Affinion, and providing our apology.”

The bank terminated its contract with Affinion when it became aware of the problems around two years ago. The bank stated that affected customers will receive either credit to their account or a check in the mail.

The CFPB ruling stipulates that as well as repaying customers, U.S. Bank must strengthen its management and oversight of third party providers. The CFPB has also ordered that steps be taken to ensure that illegal billing practices do not occur again at the bank.

While studying economics, Brendan found himself comfortably falling down the rabbit hole of restaurant work, ultimately opening a consulting business and working as a private wine buyer. On a whim, he moved to China, and in his first week following a triumphant pub quiz victory, he found himself bleeding on the floor based on his arrogance. The same man who put him there offered him a job lecturing for the University of Wales in various sister universities throughout the Middle Kingdom. While primarily lecturing in descriptive and comparative statistics, Brendan simultaneously earned an Msc in Banking and International Finance from the University of Wales-Bangor. He's presently doing something he hates, respecting French people. Well, two, his wife and her mother in the lovely town of Antigua, Guatemala. <i>To contact Brendan or give him an exclusive, please contact him at [email protected]</i>
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