One of the largest banks in the US illegally opened accounts for customers without their permission, according to the Consumer Financial Protection Bureau (CFPB).
Minneapolis-based US Bank, the country’s fifth-largest bank with over $559 billion in assets, accessed unsuspecting customers’ credit reports and opened checking and savings accounts, credit cards and lines of credit without customers’ authorization in order to boost sales, the CFPB found in a five-year-long investigation.
US Bank knew its employees were opening the unauthorized accounts but failed to regulate them, according to the agency. The bank imposed sales goals on workers and introduced an incentive-compensation program that financially rewarded employees for selling its products like deposit accounts and credit cards, the CFPB said.
“For over a decade, US Bank knew its employees were taking advantage of its customers by misappropriating consumer data to create fictitious accounts,” CFPB Director Rohit Chopra said in a statement Thursday. “We all must do more to hold lawbreaking companies accountable when they abuse and misuse our sensitive personal data.”
The illegal actions harmed the bank’s customers by hurting their credit scores, according to regulators. Customers were also forced to close the unauthorized accounts and seek refunds on fees they were charged.
A spokesperson for US Bank told CBS MoneyWatch that only a fraction of the company’s accountholders were affected and that the practices date back several years.
“Today’s settlement related to legacy sales practices involving a small percentage of accounts dating back to 2010,” the spokesperson said in aa statement. “Since 2016, the bank has made process and oversight improvements that have been effective in addressing these sales practices and concerns.”
The CFBP is fining US Bank $37.5 million, which will be paid out to consumers who have been harmed by violations of federal consumer financial protection law. US Bank must also return all unlawfully charged fees to its customers, with interest.
in which bank employees opened unauthorized accounts for existing clients. The company in 202 was fined $3 billion, including a $500 million civil penalty to be distributed to investors.