The First National Bank of Omaha (FNBO) has agreed to pay
over $35 million to settle claims that the bank engaged in deceptive marketing
and billing of customers for credit card add-on products. This is the eighth action the Consumer Financial Protection Bureau has taken in coordination with another regulator to address illegal practices with respect to credit card add-on products and the 12th action the CFPB has taken in total to address these practices.
FNBO entered into separate consent orders with the CFPB and the Office of the Comptroller of the Currency. The CFPB ordered the bank to repay $27.75 million to
approximately 257,000 consumers and pay a $4.5 million civil penalty to the CFPB’s
Civil Penalty Fund. The OCC assessed a $3 million civil penalty against the bank for restitution to customers who were unfairly billed for identity theft protection they did not receive
CFPB Director Richard Cordray
commented, “First National Bank of Omaha violated the trust of its customers by
illegally signing them up for credit card add-on products. The CFPB's track
record, and this result today, shows strong and consistent action against
credit card companies that dupe consumers into buying a product they do not want.”
CFPB’s enforcement
action. The CFPB alleged that FNBO violated provisions of the Consumer
Financial Protection Act governing unfair and deceptive acts or practices by
using deceptive marketing tactics to lure consumers into accepting credit card
debt-cancellation “add-on” products and by charging consumers for credit
monitoring services they never received.
The CFPB’s consent order with FNBO pertains to the bank’s
allegedly unfair billing practices from 1997 to 2012 and its allegedly
deceptive enrollment practices from 2010 to 2012 until the CFPB’s supervisory
exam at that time. Among other things, the CFPB claimed that FNBO:
- disguised the fact that it was selling consumers an add-on product;
- distracted consumers into making the relevant purchases;
- failed to disclose to consumers their “ineligibility” for the add-on products;
- hindered consumers from obtaining the benefits of the debt-cancellation products;
- made the cancellation of the add-on products difficult; and
- billed consumers for credit monitoring services that FNBO did not provide.
In addition to the monetary redress and civil penalty
totaling $32.25 million, the CFPB’s consent order prohibits FNBO from marketing
any debt-cancellation or credit-monitoring add-on products until the bank
submits a compliance plan to the CFPB.
OCC’s enforcement
action. The OCC alleged that FNBO violated Section 5 of the Federal Trade
Commission Act by billing consumers for identity-theft protection products from
December 1997 to July 2013 even though the consumers did not receive the full
benefit of these credit monitoring and/or “credit report retrieval services”
products.
Under the OCC’s Stipulation and Consent Order, the $3
million civil penalty imposed on FNBO includes restitution to consumers for the
full amount that they paid for the identity-theft protection products plus any
associated over-limit fees, overdraft fees, or finance charges the consumers
incurred on their card accounts.
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