Bank of America will repay $727 million to consumers who were mislead into buying credit card add-ons, such as credit protection plans and credit monitoring. The Consumer Financial Protection Bureau announced the action stating that BofA was fined for unfairly billing consumers for services relating to identity theft protection “add-on” products and for using deceptive marketing and sales practices for credit protection “add-on” products.
The CFPB announced as part of the action that BofA misled consumers into thinking they got a free 30-day trial of the products. In reality, consumers were charged for the first month unless they cancelled before the 30-day period ended. Consumers were enrolled without their knowledge. Additionally, consumers were misled concerning the benefits of the add-on products. The bank informed consumers they would get debts partially cancelled if they died or were hospitalized. This did not happen. Consumers assumed these benefits were automatic but they weren’t. They had to be applied for an approved.
BofA also billed consumers for ID theft protection or credit monitoring products, such as “Privacy Guard”, “Privacy Source” and “Privacy Assist”. They did this even though they did not have all the needed information the bank needed to monitor their accounts for fraudulent activity.
Nearly 1.4 million consumers will receive refunds of a least $250 million in fees for the “credit protection” products. The time period was between October 1,2010 and March 31, 2013 and covered anyone who was charged a fee and did not activate benefits or they were denied. Approximately 1.5 million consumers purchased the “identity theft protection” products and were improperly billed for services not performed. Those eligible are those who were enrolled in the “identity theft protection” between October 2000 and September 2011 and did not receive full services.
This enforcement action by the CFPB is the fifth time it has taken such action against banks regarding credit card add-ons. Previously, Capital One, Discover, Chase, and American Express also have been ordered to pay consumers. In total, consumers have received approximately $1.5 billion in refunds for credit card add-ons.