WASHINGTON — The Consumer Financial Protection Bureau has ordered First National Bank of Omaha to provide $27.75 million in relief to roughly 257,000 consumers harmed by illegal practices with credit card add-on products.
The bank used deceptive marketing to lure consumers into debt cancellation add-on products and it charged consumers for credit monitoring services they did not receive, the CFPB said. First National Bank of Omaha will also pay a $4.5-million civil money penalty to the CFPB.
“First National Bank of Omaha violated the trust of its customers by illegally signing them up for credit card add-on products,” said CFPB Director Richard Cordray in a statement. "The CFPB's track record, and this result today, shows strong and consistent action against credit card companies that dupe consumers into buying a product they do not want."
According to the CFPB, from 2002 until at least 2012, the bank offered add-on debt cancellation products with its credit card, including “Secure Credit” and “Payment Protection.” The bank promoted these products as providing a monthly payment to the cardholder’s account in the event of certain hardships like involuntary unemployment, hospitalization, or disability. Cardholders were charged a monthly fee. 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 said.
The order covers the bank’s unfair billing practices from 1997 to 2012, and the bank’s deceptive enrollment practices from 2010 to 2012, when the practices stopped after a CFPB supervisory exam. The Bureau found the bank deceptively marketed the debt cancellation add-on products to consumers and it found illegal billing for credit monitoring services that consumers did not receive.
Specifically, the bank:
- Disguised the fact that it was selling consumers a product.
- Distracted consumers into making a purchase.
- Failed to disclose consumers’ ineligibility.
- Hindered consumers from obtaining debt cancellation product benefits.
- Made cancellation of debt cancellation products difficult.
- Billed for credit monitoring services not provided,
The full text of the CFPB’s Consent Order is available at: http://files.consumerfinance.gov/f/documents/082016_cfpb_FNBOconsentorder.pdf