Thousands of First National Bank of Omaha (the “Bank”) customers will be receiving their portion of the $27.75 million the Bank was ordered by the Consumer Financial Protection Bureau (CFPB) to pay on August 20, 2016. This was the result of an investigation that found some 275,000 consumers harmed by illegal practices in connection to credit card add-on products. The CFPB found that the Bank used deceptive marketing tactics to mislead customers into buying debt cancellation products that they did not want and charged customers for credit monitoring services they did not receive.
From 2002 until at least 2012, the Bank offered add-on debt cancellation products with its credit card, including “Secure Credit” and “Payment Protection.” Purchase of these products would prompt monthly payment of the cardholder’s monthly bill in the event of certain hardships, such as involuntary unemployment, hospitalization, or disability. The Bank also offered credit monitoring products, including “Privacy Guard” and “IdentitySecure” to monitor a cardholder’s credit for potential identity theft or fraud and to provide consumers with copies of their credit reports.
The CFPB claims the Bank forced customers to listen to their sales pitch about debt cancellation products when they called on the phone to activate their cards. The Bank led some consumers to believe they would not have to pay for the debt cancellation products and, in some cases, did not make it clear that consumers were making a purchase. For example, they presented it as if the consumer was receiving a benefit, updating their account, or that the consumer was merely agreeing to receive more information about the product.
When marketing the debt cancellation products, the Bank told some consumers they were eligible for the product, even though they had disclosed information suggesting they would be ineligible for some product benefits. Furthermore, due to the Bank’s strict eligibility standards and administrative requirements, many customers were prevented from obtaining several of the promised debt cancellation benefits. For example, the Bank would not cover consumers if they had pre-existing health conditions, but the Bank defined pre-existing as any condition diagnosed or appearing for up to six months after consumers enrolled.
Customers that tried to cancel the debt cancellation products met obstacles and bank representatives made it difficult for them to opt out of the service. Customer service representatives were even given sales incentives if they saved a customer from cancelling. Consumers were often forced to demand cancellation multiple times to finally have the product(s) cancelled.
In many cases, cardholders did not receive the credit monitoring services they paid for because the Bank did not properly process their authorization or the credit reporting companies could not process the authorizations because they could not match the cardholder’s information to their files.
In addition to repaying $27.75 million to affected consumers, the Bank is required to stop billing customers for products if they are not providing the promised benefits. They are also prohibited from marketing any debt cancellation or credit monitoring add-on products until it submits a compliance plan to the CFPB. The Bank will also have to pay a $4.5 million penalty to the CFPB.
Always take care to review any benefits, protections, and services offered by your credit card company to ensure you understand the provisions and restrictions. If you have questions regarding the service or any add-on products, immediately contact the banking institution for clarification. Be sure to keep your agreement and any related documents in a safe place so that you can reference them when needed. If you are unable to resolve your dispute with the company, file a complaint with Business Consumer Alliance.
Related Stories
Santander Bank N.A. to Pay $10 Million for Deceptive Tactics
Cramming Scam Forces AT&T to Issue $6.8 Million in Refunds
Volkswagen Agrees to a Huge $14.7 Billion Settlement