U.S. Bank  to Pay $37.5 Million for Illegally Exploiting Personal Data Opening Accounts for Customers Without Their Knowledge

Image Wikimedia Asher Heimermann

U.S. Bank was penalized today by the Consumer Financial Protection Bureau (CFPB) for improperly accessing its clients’ credit files and opening checking and savings accounts, credit cards, and credit lines without their consent. In addition to setting sales targets as part of their workers’ job duties, U.S. Bank pressured and rewarded its staff to sell a variety of goods and services to the company’s consumers. In order to apply for and open unauthorized accounts, U.S. Bank personnel illegally accessed customers’ credit reports and sensitive personal information. U.S. Bank must compensate injured clients and forfeit $37.5 million in fines.

According to CFPB Director Rohit Chopra, “For more than a decade, U.S. Bank knew its employees were abusing its clients by misusing consumer data to create bogus accounts.” “We all U.S. Bank was penalized today by the Consumer Financial Protection Bureau (CFPB) for improperly accessing its clients’ credit files and opening checking and savings accounts, credit cards, and credit lines without their consent. In addition to setting sales targets as part of their workers’ job duties, U.S. Bank pressured and rewarded its staff to sell a variety of goods and services to the company’s consumers. In order to apply for and open unauthorized accounts, U.S. Bank personnel illegally accessed customers’ credit reports and sensitive personal information. U.S. Bank must compensate injured clients and forfeit $37.5 million in fines.

According to CFPB Director Rohit Chopra, “For more than a decade, U.S. Bank knew its employees were abusing its clients by misusing consumer data to create bogus accounts.” “We all must do more to hold lawbreaking companies accountable when they abuse and misuse our sensitive personal data.”

The CFPB’s investigation uncovered specific evidence showing that U.S. Bank knew that employee account opening was being influenced by sales pressure and that the bank lacked necessary controls to stop and identify these accounts. Particularly, U.S. Bank mandated sales targets for bank workers as part of their duties. Additionally, U.S. Bank put in place sales campaigns and an incentive-compensation scheme that paid staff for promoting bank goods.

Due to U.S. Bank’s actions, its clients suffered from unwanted accounts, damage to their credit histories, and a loss of control over their personally identifiable information. Customers also wasted time and effort canceling unauthorized accounts and dealing with the fallout, such as requesting reimbursements for incorrectly paid fees.

  • Exploiting personal data without authorization: The Fair Credit Reporting Act, among other things, defines the permissible uses of credit reports, and users of credit reports may only request them if they have a permissible purpose. U.S. Bank used customers’ credit reports without a permissible purpose, and without its customers’ permission, to facilitate opening unauthorized credit cards and lines of credit.
  • Opening accounts without consumer permission: U.S. Bank opened deposit accounts, credit cards, and lines of credit without permission. This included opening Reserve and Premier lines of credit, which carry high interest rates and expensive fees. This behavior violated the Consumer Financial Protection Act and the Truth in Lending Act.
  • Failing to provide legally required consumer disclosures: The Truth in Savings Act requires banks to provide certain disclosures when opening new deposit accounts. U.S. Bank violated the law when its employees opened consumer deposit accounts without permission and, in the process of doing so, failed to provide the required disclosures.

Enforcement Measures

The Consumer Financial Protection Act grants the Consumer Financial Protection Bureau (CFPB) the power to take legal action against institutions that violate consumer financial protection laws, including those that engage in unfair, misleading, or abusive activities or practices. According to the CFPB’s order, U.S. Bank must pay substantial fines.

U.S. Bank will pay a $37.5 million fine to the Consumer Financial Protection Bureau, which will be deposited into the CFPB’s victims relief fund. Consumers who have been affected by violations of federal consumer financial protection law are compensated through this fund.

U.S. Bank must come up with a strategy to make things right for damaged clients by forfeiting and restoring all illegally collected fees and expenses, together with interest. U.S bank said in a statement,  “The settlement is related to legacy sales practices involving a small percentage of accounts dating back to 2010.”

Source CFBB.gov



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