US Bank Get $37.5 Million Fine for Opening Fake Accounts
The Consumer Financial Protection Bureau (CFPB) announced Thursday action against U.S. Bank for illegally accessing its customers’ credit reports and opening checking and savings accounts, credit cards, and lines of credit without customers’ permission.
U.S. Bank pressured and incentivized its employees to sell multiple products and services to its customers, including imposing sales goals as part of their employees’ job requirements. In response, U.S. Bank employees unlawfully accessed customers’ credit reports and sensitive personal data to apply for and open unauthorized accounts. U.S. Bank must make harmed customers whole and pay a $37.5 million penalty.
“For over a decade, U.S. Bank knew its employees were taking advantage of its customers by misappropriating consumer data to create fictitious accounts,” said CFPB Director Rohit Chopra. “We all must do more to hold lawbreaking companies accountable when they abuse and misuse our sensitive personal data.”
U.S. Bank is based in Minneapolis and has $559 billion in assets. That makes it the fifth largest bank in the U.S. The bank operates more than 2,800 banking branches across the nation.
The CFPB’s investigation found specific evidence that revealed that U.S. Bank was aware that sales pressure was leading employees to open accounts without authorization, and the bank had inadequate procedures to prevent and detect these accounts. Specifically, U.S. Bank imposed sales goals on bank employees as part of their job requirements. U.S. Bank also implemented sales campaigns and an incentive-compensation program that financially rewarded employees for selling bank products.
U.S. Bank’s conduct harmed its customers in the form of unwanted accounts, negative effects on their credit profiles, and the loss of control over personally identifiable information. Customers also had to waste time and energy closing unauthorized accounts and resolving consequences stemming from them, including seeking refunds for improperly charged fees.
The CFPB’s order requires U.S. Bank to:
- Pay a $37.5 million fine: U.S. Bank will pay a $37.5 million penalty to the CFPB, and the CFPB will deposit it into the CFPB’s victims relief fund. This fund provides compensation to consumers harmed by violations of federal consumer financial protection law.
- Forfeit and return all unlawfully charged fees and costs to harmed customers: U.S. Bank must develop a plan to remediate harmed consumers by returning all unlawfully charged fees and costs, plus interest.