First National Bank of Omaha fined for credit card practices

The bank will refund $27.75 million to about a quarter of a million affected consumers and will also pay a $4.5 million civil money penalty to the CFPB. Separately, the OCC also fined the company $3 million.

The Consumer Financial Protection Bureau has issued an enforcement action against First National Bank of Omaha for illegal practices with debt cancellation and credit monitoring add-on products.

The bank will refund $27.75 million to about a quarter of million affected consumers and will also pay a $4.5 million civil money penalty to the CFPB.

According to the CFPB, the bank used deceptive marketing to lure consumers into debt cancellation add-on products, and it charged consumers for credit monitoring services they did not receive.

From 2002 until at least 2012, the bank offered add-on debt cancellation products with its credit card, including “Secure Credit” and “Payment Protection.” The bank allegedly promoted these products as providing a monthly payment to the cardholder’s account in the event of certain hardships.

The bank also offered credit monitoring products, including “Privacy Guard” and “IdentitySecure” to monitor a cardholder’s credit for potential identity theft or fraud and to provide consumers with copies of their credit reports.

The products were sold and administered by a third party, Affinion Group, said First National President Daniel O’Neill. Affinion and its subsidiaries were fined last summer by the CFPB for similar practices with credit card add-ons. U.S Bank  was also fined, in 2014, over products it offered through a relationship with Affinion.

According to the bureau, First National disguised the fact that it was selling consumers a product, distracted consumers into making a purchase, failed to disclose consumers’ ineligibility, hindered consumers from obtaining debt cancellation product benefits, made it difficult for customers to cancel the debt cancellation products and billed for credit monitoring services not provided.

The order covers unfair billing practices from 1997 to 2012 and deceptive enrollment practices from 2010 to 2012.

The $18.4 billion First National crossed the $10 billion asset threshold for CFPB regulation in the first quarter of 2010, going from $8.8 billion at the end of 2009 to $11.4 billion as of March 31, 2010.

“First National Bank of Omaha violated the trust of its customers by illegally signing them up for credit card add-on products,” said CFPB Director Richard Cordray. “The CFPB’s track record, and this result today, shows strong and consistent action against credit card companies that dupe consumers into buying a product they do not want.”

In a separate action, the Office of the Comptroller of the Currency also ordered First National to pay a $3 million penalty and make restitution to affected customers “enrolled in and paid for identity theft protection products between December 1997 and July 2013, but did not receive the full benefit of the products.”

Fredrikson & Byron Law