If you’re worried about how you would pay your bills if you lost your job or could no longer work, you may have signed up for a “credit protection” plan offered by your credit card company. And if you were concerned about identity theft, you may have signed up for a service to monitor your credit and protect you from identity theft.
But you may not have received the benefits you expected, according to the Consumer Financial Protection Bureau, which announced an enforcement action against Bank of America on Wednesday. It ordered the credit card issuer to pay $727 million in relief to consumers for what it described as illegal credit card practices. This is the largest consumer refund of any CFPB enforcement action to date.
Under the agreement, the bank will issue refunds of $268 million to approximately 1.4 million customer accounts in relation to credit protection products, and an additional $459 million in refunds to around 1.9 million customer accounts for identity protection products. Many customers have already received credits to their accounts, says the bank. In addition, Bank of America said in a statement that it stopped marketing identity theft protection products in December 2011 and credit card debt cancellation products in August 2012.
Sold When Consumers Activated Cards
According to the CFPB, these products were largely sold by telemarketers when customers activated their cards, or through outbound telemarketing. Some made misstatements to consumers about the protection they would get. For example, consumers may have been told the first 30 days of coverage was free, when in fact it wasn’t. Instead, customers had 30 days to cancel and receive reimbursement of their fees. Other customers may have been led to believe they were simply requesting additional information about the product when they actually were being enrolled in the program.
One of the products in question was called “Credit Protection Plus” and, according to the consent order, the last version Bank of America offered would cancel up to twice the customer’s minimum monthly payment for up to 18 months for involuntary unemployment, disability, hospitalization and leave of absence (each as defined in the product’s terms and conditions); up to three minimum monthly payments for certain defined life events, including marriage, divorce, birth/adoption, new residence, graduation, entering college and retirement; and up to $25,000 of the customer’s balance upon the customer’s death. When last marketed to customers, the monthly fee for this product was 0.85% of the customer’s monthly balance.