Author: Philip Eric
U.S. Bank has been fined $37.5m for its unlawful business activities. The bank allegedly used credit reports illegally for more than ten years to open fraudulent lines of credit and set up phony accounts to exaggerate sales figures.
After a five-year study, the Consumer Financial Protection Bureau discovered that U.S. Bancorp had pressured its staff to exceed its sales target. The employees were involved in opening unauthorized credit cards, checking and saving accounts, and lines of credit.
The History of the U.S. Bank’s Customer Data Scandals
U.S. Bank illegally used customer data to create sham accounts for the last decade. They are now fined $37.5 million as punishment.
But that’s not all, they’ve also been ordered to pay interest on the penalty sum. This is a massive slap in the face for U.S. Bank, and it’s a clear message that companies can no longer get away with abusing customers’ data in this way.
Employees were pressured to access customer credit reports and open new accounts to inflate sales numbers.
According to CFPB Director Rohit Chopra, for over a decade, U.S. Bank knew its staff were exploiting its clients by using their information to create fake accounts. We must step up our efforts to hold illegal businesses responsible when they misuse clients’ sensible data.
The CFPB inquiry discovered proof that U.S. Bank management was aware of the pressure put on staff to form fictitious accounts and failed to act. In fact, the bank created a reward scheme that financially incentivized staff to grow their target.
The U.S. Bank’s Admission
In what can only be seen as an admission of guilt, U.S. Bank has agreed to pay a $37.5 million fine plus interest on unlawfully collected fees.
It’s not clear exactly how many customers were affected by this scam. Still, the fact that U.S. Bank was willing to break the law to pad its bottom line is appalling.
Along with paying a $37.5 million fine, Minneapolis-based U.S. Bank will reimburse affected customers’ interest and return any fees and penalties improperly charged to the fake accounts.
A U.S. Bank representative claimed in a statement to Insider that the settlement concerned “past sales tactics affecting a small percentage of clients” that started in 2010. They claimed that the bank had made process and oversight enhancements since 2016 to address the issues raised by the illicit sales practices. The CFPB’s action brings an almost five-year inquiry to a close, “a representative of the U.S. Bank told Insider. “We are glad to have resolved this issue.
The U.S. Bank alteration is not the first time a significant bank has been discovered to have opened accounts for unknowing clients without their consent. Wells Fargo also reached a $185m million settlement with regulators after workers forcibly established 2m false accounts to enhance their cross-sell ratio.