U.S. Bank Fined $37.5 Million for Fake Customer Account Violations

By: Ken Chase.

The Consumer Financial Protection Bureau announced on Thursday that it is fining U.S. Bank for illegal activities that involved unlawfully using customer credit reports to create accounts for customers without their permission. According to the Bureau, the bank incentivized its employees to boost services to its clients, placing pressure on those workers to skirt laws and regulations to create new savings, checking, and credit card accounts.

The CFPB investigation determined that U.S. Bank officials was aware that their employees were illegally accessing customer credit reports and opening unauthorized accounts, and that the company’s pressure and incentive efforts were motivating these illegal acts. The firm’s policies apparently forced employees to meet certain set sales goals and provided incentives to those who achieved those objectives. In addition, the company reportedly had few safeguards in place to prevent unauthorized account creation.

As a result of these violations, the CFPB found that the bank’s activities had a negative impact on its customers, inflicting harm on their credit and causing them “loss of control over personally identifiable information.” Affected customers also suffered loss of time as they worked to close the illegally created accounts. Some customers also had to deal with improper fees assigned to the accounts.

The exploitation of customer personal data, unauthorized account openings, and failure to provide necessary consumer disclosures resulted in several violations of federal law:

“The CFPB found that U.S. Bank violated the Consumer Financial Protection Act, the Fair Credit Reporting Act, the Truth in Lending Act, and the Truth in Savings Act.”

The Bureau’s enforcement action requires U.S. Bank to create a plan to make affected customers whole by returning any costs and illegally charged fees, with interest, to those consumers. In addition, the bank must pay a penalty fine of $37.5 million to the CFPB, which the Bureau will assign to its victims relief fund.

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