CFPB Files Suit Against National Bank Concerning Alleged Unauthorized Accounts

On March 9, 2020, the Consumer Financial Protection Bureau (CFPB) filed a lawsuit against a national bank in the U.S. District Court for the Northern District of Illinois alleging that the bank opened unauthorized accounts and enrolled customers in unauthorized products and services without consumers’ knowledge or consent.  According to the CFPB’s complaint, the bank opened deposit and credit-card accounts in consumers’ names, transferred funds from consumers’ existing accounts to new, improperly opened accounts, enrolled consumers in unauthorized online-banking services, and activated unauthorized lines of credit on consumers’ accounts.

The CFPB asserts that for several years beginning in 2008 and through at least 2016, the bank used cross-selling strategies to increase products and services offered to existing clients by incentivizing employees (including continued employment) on meeting set sales goals.  The bank allegedly knew employees were opening unauthorized accounts but failed to take sufficient steps to stop the conduct.

The CFPB claims that this conduct was an unfair and abusive practice in violation of sections 1031, 1036(a)(1), 1054, and 1055 of the Consumer Financial Protection Act of 2010 (CFPA), 12 U.S.C. §§ 5531, 5536(a)(1), 5564, 5565, and also violated the Truth in Lending Act (TILA), 15 U.S.C. § 1601 et seq., and its implementing regulation, Regulation Z, 12 C.F.R. part 1026, the Truth in Savings Act (TISA), 12 U.S.C. § 4301 et seq., and its implementing regulation, Regulation DD, 12 C.F.R. part 1030​.​  The CFPB is seeking an injunction, civil damages, and a civil money penalty.

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