Most everyone in Georgia has received inquiries regarding add-on products from their credit card company. Two of Bank of America’s add-on products were identity theft protection and credit protection. Recently, Bank of America settled with federal regulators over allegations of fraud regarding these products.
The credit protection add-on promised to reduce a cardholder’s balance, for a fee, if he or she became disabled or lost his or her job. Federal regulators say that Bank of America, through its third-party marketers, misled customers into believing they were only being given information regarding the program when they were actually being enrolled. There was also a question as to when consumers would be charged the fees.
As for the identity theft protection, consumers who purchased the product reportedly never gave authorization for the company to view their credit, so the protection was essentially worthless. More than a year ago, Bank of America stopped selling these products to consumers. The bank claims it issued refunds to many of its customers already. Even so, $738 million of the $783 million settlement is to reimburse customers. The remaining money is for penalties.
Under the terms of the settlement, Bank of America is also required to keep better control of its third-party marketers. Had the bank kept better track of those vendors, it may not be in this situation. Anytime a Georgia business works with third-party vendors or marketers, it is important to be sure they are upholding the same standards as the business for which they work. Otherwise, the business could end up facing allegations of fraud based on the actions of those vendors.
Source: newsobserver.com, “BofA agrees to $783 million settlement in consumer credit card dispute”, Andrew Dunn, April 9, 2014