CFPB and OCC Issue Consent Orders Against National Bank for Credit Card Practices

CFPA  •  CFPB  •  Credit Cards  •  FTCA  •  OCC  •  Telecommunications

​On July 21, 2015, the Consumer Financial Protection Bureau (“CFPB”) issued a consent order requiring a national bank and its subsidiaries to provide roughly $700 million in consumer relief due to the bank’s practices relating to its credit card services and add-on products.  The consent order states that a CFPB review of the bank’s practices revealed violations of various sections of the Consumer Financial Protection Act of 2010 (“CFPA”).  CFPB stated that between 2003 and 2012, approximately 7 million customers were affected by the bank’s deceptive marketing of add-on products, billing for unreceived benefits, and administration of debt collection and credit monitoring products.  CFPB also stated that the bank charged expedited payment fees to nearly 1.8 million consumer accounts during collection calls.  The consent order requires the bank to provide $700 million in consumer relief to approximately 8.8 million customers.  The consent order also requires that the bank pay a $35 million penalty to the CFPB’s Civil Penalty Fund. ​ The bank is prohibited from marketing any add-on products by phone or at the point of sale, or engaging in attempts to retain consumers in these add-on products by phone, until it submits a compliance plan to CFPB.

Also on July 21, 2015, the Office of the Comptroller of Currency (“OCC”)​ issued two consent orders against the same national bank and its affiliates as a result of the bank’s billing and marketing practices, which the orders state were in violation of section 5 of the Federal Trade Commission Act (“FTCA”), 15 U.S.C. § 45(a)(1).  The first order directed the bank to provide restitution to eligible customers, improve governance to third-party vendors associated with add-on products, develop a risk management program for add-on products, develop an internal audit program for add-on products, and conduct an add-on product review.  The second order assessed a second $35 million civil money penalty against the bank payable to the U.S Treasury.  The OCC acknowledged that it was coordinating its action with the CFPB, and that restitution payments made by the bank pursuant to the OCC’s order would also satisfy the bank’s identical obligations under the CFPB action.

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