Bank of America is in talks with the Consumer Financial Protection Bureau to pay an $800 million settlement over allegations that the bank deceived customers when selling them additional credit card products. If finalized, the settlement would be the largest levied by the CFPB to date.
This wouldn’t be the first time the CFPB has taken harsh – and expensive – action against a big bank for credit card add-ons. In fact, if the settlement goes through, it would mark the fifth time the CFPB has taken action against a credit card provider over add-on products like identify-theft protection and debt cancellation. For example, in July 2012 the CFPB and the Office of the Comptroller of the Currency slammed Capital One bank for the sale and marketing of debt suspension and cancellation products. The CFPB issued a $25 million penalty, while the OCC issued a $35 million penalty and made Capital One reimburse $150 million to 2.5 million affected customers.
What do Bank of America and Capital One have in common in these cases (besides a huge check to write)? They’ve both been accused of UDAAP (Unfair, Deceptive and Abusive Acts or Practices) violations. The CFPB has carried out UDAAP enforcement on a case-by-case basis for creditors and collectors alike. The ARM industry should pay attention to cases like this, as it signals a willingness on the part of the CFPB to narrowly focus on certain issues across different companies. What will that issue be with collection agencies?
Our Compliance Overview: UDAAP has a detailed explanation of the consequences of UDAAP violations, as well as a timeline of some of the highest-profile enforcement actions taken by federal regulators. You do not want to be on that list! Click here for a free preview of the report.
Compliance Overview: UDAAP also includes:
- Top 10 compliance tips, sourced from industry experts, to make sure your agency and vendors are keeping up with UDAAP requirements.
- Comprehensive checklists to ensure your compliance management system goes above and beyond the requirements for a CFPB examination.
- Real-world examples of UDAAP violations the CFPB has specifically stated it will look for in the debt collection industry.