WASHINGTON Bank of America will pay $772 million to settle allegations by two regulators that it engaged in unfair fee collection and marketing related to credit card add-on products.
The Office of the Comptroller of the Currency and the Consumer Financial Protection Bureau separately announced actions Wednesday alleging the bank's billing practices and marketing of such products as identify theft protection violated laws.
"We have consistently warned companies about illegal practices related to credit card add-on products," CFPB Director Richard Cordray said in a press release. "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."
Among a string of other actions the CFPB has taken along with other regulators against banks for credit card add-on products, the monetary penalties and restitution issued against B of A are the largest. The CFPB has so far issued five orders related to add-on products.
The CFPB ordered B of A and its affiliated FIA Card Services to pay $727 million in relief to affected consumers. The bank must also pay a $20 million penalty to settle the allegations. The CFPB said B of A wrongfully charged consumer accounts for credit monitoring and credit reporting services that the customers were not receiving.
The OCC, meanwhile, fined B of A $25 million and ordered it to pay $459.5 million in restitution to 1.9 million customers affected by alleged unfair billing practices. (The OCC said any restitution payments made as part of its order will satisfy identical obligations required by the CFPB.)
The OCC also ordered the bank to improve its governance of third-party vendors that assisted in offering the add-on products and to provide a risk management plan for such products marketed or sold by the bank or its vendors.
A B of A spokesman said the institution stopped selling such legacy add-on products more than a year ago. A handful of major card issuers such Capital One and American Express have also dialed back such products or halted them completely amid recent enforcement actions.
"Bank of America stopped marketing identity theft protection products in December 2011 and credit card debt cancellation products in August 2012," the spokesman, Tony Allen, said in an emailed statement. "The company has already issued refund payments to the majority of affected customers."