On August 25, the Consumer Financial Protection Bureau ordered First National Bank of Omaha to pay more than $32 million for alleged unlawful credit card practices related to add-on products and services. In addition to a penalty of $4.5 million, the bank must provide $27.75 million in relief to nearly 257,000 consumers.
The CFPB’s order addressed two specific products offered by the bank in connection with its credit card. The CFPB claims that from 2002 until at least 2012, the bank offered add-on debt cancellation products to its credit cardholders. The bank marketed the cancellation products as a way for cardholders to meet their monthly payments in the event of certain hardships, such as involuntary unemployment, hospitalization, or disability. The bank also offered credit monitoring products, including “Privacy Guard” and “IdentitySecure,” designed to provide cardholders with copies of their credit scores as well as monitoring their credit for signs of identity theft or fraudulent activities. In exchange for these products, the bank charged cardholders a monthly fee.
The Bureau alleged that the bank deceptively marketed these products and billed cardholders for services that they never received. According to the CFPB, the bank forced cardholders to listen to sales pitches about the bank’s debt cancellation products by implying that cardholders were required to remain on the phone to activate their credit cards. The consent order also states that the bank also led some cardholders to believe that the debt cancellation products were free. The CFPB further alleged that the bank hindered customers from obtaining the benefits of the debt cancellation products and made it difficult for customers to cancel the service. Finally, regarding the bank’s credit monitoring service, the CFPB alleged that many cardholders did not receive the services for which they paid because the bank did not properly process their authorization.
The bank neither admitted nor denied wrongdoing, but bank president Daniel K. O’Neill apologized in a written statement and said that some of the add-on products were offered by a third-party vendor. O’Neill further noted that the bank ended its relationship with the vendor after becoming aware of the problems associated with the add-on products.
The Office of the Comptroller of the Currency joined the CFPB’s action and, in a separate order, directed the bank to pay restitution and a $3 million civil penalty for its credit card practices. This represents the eighth time the CFPB has joined forces with another regulator to address problems associated with credit card add-on products.