US bank opened fake accounts for unsuspecting customers

One of the largest US banks illegally opened accounts for customers without their permission, according to the Consumer Financial Protection Bureau (CFPB).

Minneapolis-based U.S. Bank, the nation’s fifth-largest bank with more than $559 billion in assets, accessed unsuspecting customers’ credit reports and opened checking and savings accounts, credit cards and lines of credit without customers’ authorization in order to increase sales, the CFPB. found in a five-year investigation.

The US bank knew its employees were opening the unauthorized accounts but failed to regulate them, the agency said. The bank imposed sales goals on workers and introduced an incentive and compensation program that financially rewarded employees for selling its products, such as deposit accounts and credit cards, the CFPB said.

“For more than a decade, US Bank knew that its employees were taking advantage of its customers by misappropriating consumer data to create fictitious accounts,” CFPB Director Rohit Chopra said in one statement Thursday. “We must all do more to hold offending companies accountable when they abuse and misuse our sensitive personal data.”

The illegal actions harmed the bank’s customers by damaging their credit scores, regulators said. Customers were also forced to close unauthorized accounts and seek refunds of fees they were charged.

A spokesperson for US Bank told CBS MoneyWatch that only a portion of the company’s account holders were affected and that the practices date back several years.

“Today’s settlement relates to legacy sales practices involving a small percentage of accounts dating back to 2010,” the spokesperson said in a statement. “Since 2016, the bank has made process and oversight improvements that have been effective in addressing these sales practices and concerns.”

The CFBP is fining the US bank $37.5 million, which will be paid to consumers who have been harmed by violations of the federal Consumer Financial Protection Act. The US bank must also return all illegally charged fees to its customers, with interest.

Wells Fargo participated in a similar scheme in which bank employees opened unauthorized accounts for existing customers. In 2020 the company was fined $3 billion, including a $500 million civil penalty to be distributed to investors.

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About the Author: Chaz Cutler

My name is Chasity. I love to follow the stock market and financial news!