CFPB fined $37.5 million to U.S. Bancorp for Opening Sham Accounts |
A fine was imposed by CFPB (Consumer Financial Protection Bureau) on fifth-largest commercial bank of United States named U.S. Bancorp which based on Minneapolis for using customer data to open Sham Accounts [Fake Accounts] and new lines of credit without permission of their customers. The company compelled employees to access customer credit reports and open new accounts to inflate sales figures.
US Bank is being fined $37.5 million for opening fraudulent lines of credit and creating false accounts to inflate sales numbers over more than a decade. Aside from the $37.5 million fine, Minneapolis-based U.S. Bank also has to refund any improperly collected fees and charges related to the fraudulent accounts and pay interest to consumers.
There have been several instances in which major US banks have been forced to fine their customers for illegally creating accounts without their consent. The Wells Fargo bank settled with regulators for $185 million in 2016 after it was discovered that its employees illegally created 2 million fake accounts to improve cross-selling ratio.
US Bancorp, the fifth largest commercial bank in the United States, has been charged with establishing fraudulent checking and savings accounts, credit cards, and lines of credit without the consent of customers. An investigation spanning five years revealed that employees were pressured to meet sales goals by creating fraudulent checking and savings accounts, credit cards, and lines of credit.US Bank officials had knowledge of employees’ pressure to open fake accounts, and did nothing to stop it, while holding incentive-compensation programs that reward employees for opening new accounts and selling products.
After investigating the bank, the CFBP found evidence that it was aware of its employees opening accounts without customers’ permission, and that measures were not taken to prevent and detect them. Regulations found that employees opened deposit accounts, credit cards and lines of credit that carried high interest rates and costly fees that were passed on to customers through the bank’s sales campaigns.
Aside from having to close unauthorized accounts, customers have also had to deal with consequences that stemmed from those accounts, including seeking a refund for improper charges. According to the CFPB, US Bank violated the Consumer Financial Protection Act, the Fair Credit Reporting Act, the Truth in Lending Act, and the Truth in Savings Act.
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MBA,BBA.
I am Smirti Bam, an enthusiastic edu blogger with a passion for sharing insights into the dynamic world of business and management through this website.
I hold a MBA degree from Presidential Business School, Kathmandu, and a BBA degree with a specialization in Finance from Apex College,
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