U.S. Bank pays $37.5 Million Dollar Fine for Breaking Laws Using Fake Account Scheme

U.S. Bank to pay $37.5 Million dollar fine for breaking multiple federal laws with fake account scheme by using credit card holder account information without permission.

The fifth largest bank in the USA – U.S. Bank fined for knowingly broke federal laws by allowing its employees to create fake accounts using credit data from customers without their consent. The Consumer Financial Protection Bureau (CFPB) in the USA has  now issued an enforcement action against the Bank.

The federal agency found that  U.S. Bank  violated multiple federal laws, including the Consumer Financial Protection Act, the Fair Credit Reporting Act, the Truth in Lending Act, and the Truth in Savings Act. This is similar to our other story on EU Commission fines.

In addition to the $37.5 million fine to the CFPB, which will go into the agency’s victim relief fund, the bank must also return all illegally charged fees and other costs, plus interest.

Through their investigation the Consumer Financial Protection Bureau said that US Bank pressured its employees to open fake accounts in their customers’ names in order to meet unrealistic sales goals they allege that US Bank accessed consumers credit reports to open checking and savings accounts, credit cards and lines of credit without their permission. Employees were encouraged to do so, in order to meet the bank’s goals of selling multiple products to each customer with the bank.

CFPB said that It’s common for banks and credit unions to encourage employees to cross-sell their products and services to existing consumers. But at U.S. Bank, apparently for over a decade the pressure and incentives have gotten out of hand where sales goals were now considered as part of the job requirements.

The bank’s employees accessed customers’ credit reports and other personal information to open fictitious accounts in their names to satisfy the bank’s demands. The bank knew about the fake accounts, which included checking and savings accounts, credit cards, and personal lines of credit, but failed to put procedures in place to detect and prevent the unauthorized activity.

As a result, affected customers had to deal with unwanted accounts, negative items on their credit reports, loss of control over their           information, and more. The scale of US Banks’s fake accounts scandal was not disclosed immediately by the CFP. But, it begs the question of what happens to all of the information that banks are able to collect on their users? Whos eyes are seeing that information, and what are they doing with it?

 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 

A spokesman for US Bank said the bad sales practices were a legacy issue at the bank dating back to 2016, and that the bank has made     significant improvements to its sales practices since then.

The action by the CFPB closes out a (more than five year) investigation. We are pleased to put this matter behind us,” – Lee Henderson , spokesman for U.S. Bank

U.S. Bank’s scheme is similar to one that Wells Fargo engaged in for several years, resulting in a $100 million fine IN 2018 from the CFPB and a $3 billion settlement with the Department of Justice, Securities and Exchange Commission, and two U.S. attorney’s offices.

One has to wonder if this has been going on for OVER  a decade and all with the banks knowledge, what else is being missed. 5 years to investigate also seems a rather long time – perhaps there also needs to be an investigation as to why these investigations take so long to conclude and corruption take so long to weed out of 5 star institutions.