Author: Shannon Hannes
U.S. Bank illegally used customer data to create sham accounts to inflate sales numbers for the last decade. Now they’ve been fined $37.5 million plus interest on unlawfully collected fees
The Consumer Financial Protection Bureau (CFPB) investigated US Bankcorp, the country’s fifth-largest commercial bank, and discovered that it had encouraged its staff to create phony accounts to reach sales targets.
These phony accounts featured lines of credit, credit cards, and bank and savings accounts that employees opened without the clients’ consent.
How Long has U.S. Bank Been running this Scam?
US Bankcorp allegedly started this scam around ten years ago. And U.S. Bank is being fined $37.5 million for its unlawful business activities after using client credit records for over ten years to obtain fraudulent lines of credit and construct phony accounts to exaggerate sales figures.
In a statement, the director of the Consumer Financial Protection Bureau, Rohit Chopra, claimed that “for more than a decade, U.S. Bank knew that its employees were exploiting clients by misusing their data to create bogus accounts.”
“We all need to do more to hold lawbreaking businesses accountable when they exploit and abuse our personal information,” he continued.
What Did the CFPB Investigation Reveal?
The Consumer Financial Protection Bureau (CFPB) inquiry discovered that U.S. bank managers were aware of the pressure on staff to create false accounts but did nothing about it.
They not only did not intervene, they also conducted incentive compensation systems that paid staff monetarily for marketing bank goods and launching new accounts.
In addition to the $37.5 million penalties, U.S. Bank must refund any illegitimate fees associated with the fake accounts and compensate affected customers’ interest.
What Did U.S. Bank say About the Matter?
According to Insider, a spokesperson for U.S. Bank stated that the settlement was concerning legacy sales tactics affecting a small number of accounts.
However, in response to the illicit sales tactics, the bank’s representative stated that U.S. Bank had taken process and accountability enhancements since 2016 to address the issues.
They said that “the CFPB action concludes a five-plus year investigation, and the U.S. Bank is delighted to put the matter behind them.”
Furthermore, this isn’t the first time a large bank has been caught illegally opening accounts for unknowing customers without their knowledge. Wells Fargo agreed to pay $185 million to regulators in 2016 after investigations revealed that workers fraudulently established over 2 million bogus accounts to increase their cross-sell ratio.
Key Takeaway
After a five-year investigation by the Consumer Financial Protection Bureau (CFPB), the bank was fined $37.5 million for fraudulently creating accounts using clients’ data. The inquiry indicated that the bank was aware of the fraudulent operations and encouraged its staff to engage in them by providing incentives. This isn’t the first or last time major banks will create bogus accounts to increase sales figures. As a result, the CFPB director urges the appropriate authorities to do more to hold these corporations accountable for their acts.