The Consumer Financial Protection Bureau (CFPB) has fined U.S. Bank for illegally accessing customers’ credit reports and opening accounts without their permission.
U.S. Bank allegedly pressured and incentivized its employees to sell multiple products and services as part of their employees’ job requirements.
“For over a decade, U.S. Bank knew its employees were taking advantage of its customers by misappropriating consumer data to create fictitious accounts,” CFPB Director Rohit Chopra said in a release. “We all must do more to hold lawbreaking companies accountable when they abuse and misuse our sensitive personal data.”
The CFPB’s investigation found evidence 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.
The CFPB found that U.S. Bank violated the Consumer Financial Protection Act, the Fair Credit Reporting Act, the Truth in Lending Act, and the Truth in Savings Act. Specifically, U.S. Bank was:
- Exploiting personal data without authorization. The Fair Credit Reporting Act, among other things, defines the permissible uses of credit reports, and users of credit reports may only request them if they have a permissible purpose. U.S. Bank used customers’ credit reports without a permissible purpose and without its customers’ permission, to facilitate opening unauthorized credit cards and lines of credit.
- Opening accounts without consumer permission. U.S. Bank opened deposit accounts, credit cards and lines of credit without permission. This included opening reserve and premier lines of credit, which carry high interest rates and expensive fees. This behavior violated the Consumer Financial Protection Act and the Truth in Lending Act.
- Failing to provide legally required consumer disclosures. The Truth in Savings Act requires banks to provide certain disclosures when opening new deposit accounts. U.S. Bank violated the law when its employees opened consumer deposit accounts without permission and, in the process of doing so, failed to provide the required disclosures.
The CFPB’s enforcement action requires U.S. Bank to pay a $37.5 million fine to the CFPB’s victims relief fund which provides compensation to consumers harmed by violations of federal consumer financial protection law. As part of the order, U.S. Bank must also forfeit and return all unlawfully charged fees and cost to harmed customers.