YOUR WATCHDOG

U.S. Bank owes customers $48 million

Amber Hunt
ahunt@enquirer.com
  • Bank ordered to pay $48M back to customers for credit-monitoring services that weren’t provided.
  • More than 420,000 customers expected to get money back.

More than 420,000 customers of U.S. Bank should be getting back money after the Consumer Financial Protection Bureau ordered the bank to pay $48 million for illegal billing practices.

U.S. Bank customers were unfairly charged for identity protection and credit-monitoring services that they didn’t receive, bureau officials said. The services were sold as “add-on products” for credit cards and other bank products.

In addition to the $48 million due back to customers, U.S. Bank was ordered to pay a $5 million civil penalty to the bureau and a $4 million penalty to the Office of the Comptroller of the Currency.

“We have consistently warned companies about practices related to add-on products and we will do what is necessary to prevent further harm to consumers,” bureau director Richard Cordray said in a news statement. Cordray previously served as Ohio’s attorney general.

U.S. Bank, the Cincinnati region’s No. 1 financial institution in terms of local deposits and market share, was given several months to come up with a plan to pay back customers. Regulators then will have to approve the plan.

Dana Ripley, senior vice president of U.S. Bank corporate communications, said in an email to The Enquirer that the plan is not yet approved and that it would be “premature to comment.”

The bureau order requires the bank to repay consumers “conveniently.” Customers who still bank with U.S. are to receive a credit to their accounts. Those who now bank elsewhere should receive checks in the mail. Consumers aren’t required to take any action to receive their refund.

According to the bureau, U.S. Bank’s service provider enrolled bank customers in identity-protection add-on products that promised to monitor consumers’ credit and alert them to potentially fraudulent activity. The programs, called “Privacy Guard” and “Identity Secure,” were marketed by the bank and administered by a third-party vendor.

However, the bank didn’t obtain written authorization to provide credit-monitoring services, as required. That meant customers were billed for services they didn’t receive, were unfairly charged interest and fees and didn’t receive the product benefits they were paying for, according to a bureau news release.

“Consumers may have been under the impression that their credit was being monitored for fraud and identity theft, when, in fact, these services were either not being performed at all, or were only partially performed,” the release stated.

The bureau takes action against institutions that engage in “unfair, deceptive or abusive practices.” It ordered U.S. Bank to issue refunds to more than 420,000 customers. This marks the seventh time the bureau has taken action against institutions for credit card and other add-on products.

The bureau also ordered the bank to end unfair billing practices and improve oversight of third-party vendors.

The restitution will benefit customers who enrolled in and paid for identity-theft protection products between February 2003 and August 2012, but didn’t receive the products’ full benefit.■