FDIC Settles Claims of Deceptive Credit Card Add-On Product Practices

Credit Cards  •  FDIC  •  FTCA

On September 8, the Federal Deposit Insurance Corporation (FDIC) settled with two national banks for alleged violations of Section 5 of the Federal Trade Commission Act.  The banks are wholly-owned subsidiaries of the same parent company.  The FDIC alleged that the banks engaged in unfair and deceptive practices in connection with the marketing, promotion, and sale of certain add-on products associated with their credit card programs.   Under the consent orders, the banks agreed to correct all alleged violations of law, including any allegedly deceptive representations, and to implement a comprehensive compliance program.  The banks also agreed to correct negative credit reports made to consumer reporting agencies and retain an independent certified accounting firm for auditing.  One bank has agreed to pay $8,500,000 in restitution and a $450,000 civil penalty; the other has agreed to pay $53 million in restitution and a $2,000,000 civil penalty.

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