Bank of America slapped for sneaky fees, but the real risk is mixing security and sales pitches
Richard Cordray (Bob Sullivan photo)
Ever call a company for help and get faced with an aggressive and unwanted sale pitch instead? At least one company has finally been slapped on the wrist for that.
Bank of America will have to refund $700 million to consumers to settled charges that it deceived customers through ad-on credit card products, the Consumer Financial Protection Bureau announced today.
The firm used Gotcha tactics to sign consumers up for so-called credit protection services that would allegedly forgive account holders' debts under certain circumstances. The bank routinely transferred typical consumer service calls -- important security-related calls, such as to activate a credit card -- to a sales department that was trained to use misleading scripts and upsell products.
Security and sales should NEVER be intermingled this way. It teaches consumers to avoid making these kinds of security-related calls, which can be dangerous for us all.
Generally, credit protection services protect the bank more than the consumer -- that is, they pay for a kind of insurance that pays outstanding credit card debts when a cardholder dies, for example.
The CFPB also says Bank of America took payment for credit monitoring-related services with names like “Privacy Guard,” “Privacy Source,” and “Privacy Assist" before the services were delivered.
Roughly 1.5 million consumers have received either account credit or a check in the mail from Bank of America.
"We have consistently warned companies about illegal practices related to credit card add-on products,” said CFPB Director Richard Cordray in a statement issued with the announcement. “Bank of America both deceived consumers and unfairly billed consumers for services not performed. We will not tolerate such practices and will continue to be vigilant in our pursuit of companies who wrong consumers in this market.”
Here's what Cordray said about what Bank of America was doing:
"Consumers were most often misled during inbound and outbound telemarketing calls. When customers called Bank of America, whether to activate a card or to inquire about a balance transfer, they would often reach a telemarketer who would try to sell them payment protection products. Payment protection products would theoretically allow customers to cancel some amount of credit card debt in the event of certain hardships like involuntary unemployment or disability, or for certain life events like marriage or graduation.
"Problems frequently arose when telemarketers discussed the benefits of these products – because Bank of America’s scripts contained false statements about these benefits. For example, one script we reviewed stated that with “Credit Protection Plus,” Bank of America would cancel up to 18 months of the consumer’s minimum balance if the consumer was admitted to the hospital for as little as one night. In reality, a single night’s hospital stay would only entitle consumers who successfully navigated Bank of America’s claims process to one month of benefits – not the 18 months claimed in the scripts."