Author: Geoffrey Ejiga
The CFPB has laid allegations against US Bank that bank employees were encouraged to create counterfeit credit cards, savings and checking accounts, and lines of credit using data stolen from consumer credit reports.
All this went on without the knowledge of their unsuspecting customers.
The CFPB has not given the scale of the bank scandal.
What is going on with the US Bank?
After a decade of illegally using customer credit reports to forge credit lines and open fake accounts to stretch sales numbers, US Bank has been fined a hefty $37.5 million for improper business conduct.
A 5-year investigation carried out by the Consumer Financial Protection Bureau found that US Bancorp, America’s fifth largest commercial bank, had been incentivizing employees to reach company sales goals by forging savings and checking accounts, lines of credit, and credit cards.
For over a decade, US Bank officials have been aware that its employees were exploiting customers by stealing consumers’ data to open fraudulent accounts, Rohit Chopra, the CFPB director, mentioned in a statement.
One chief regulator explained that these criminal methods hurt bank customers by ruining their credit scores, forcing customers to close illegal accounts and seek refunds on previously charged fees.
We have to do our best to make sure these companies are held responsible whenever they wrongly abuse power over our sensitive personal data, urged Chopra.
According to the investigation, US Bank officials knew about the demand faced by employees to open sham accounts but instead of stepping in, these officials conducted incentive programs to reward employees who sold fake bank products and opened more accounts.
Adding to the $37 million fine, Minneapolis-based US Bank will have to settle impacted customers’ interests and compensate for all fraudulent charges linked to the fake accounts.
According to the statement provided by Insider, one US Bank official explained that the settlement is “related to legacy sale practices carried out with a small proportion of accounts,” which dates back to 2010.
When asked to respond to these allegations, the bank stated that it has been making significant improvements in its oversight and process improvements since 2016 to handle these concerns.
“The information revealed by the CFPB brings an end to a 5-year investigation,” the bank official told Insider. “ We are all pleased to bury this case in the dust”.
US Bank’s fine isn’t the only big bank conducting this illegal activity.
In 2016, Wells Fargo had a similar scandal when it incentivized workers to create millions of fake accounts.
The incident cost Wells Fargo billions and kept the bank under heavy supervision by the Federal Reserve, destroying Wells Fargo’s reputation and causing the resignation of bank directors and eventually the CEO.
Conclusion
The Consumer Financial Protection Bureau, following its 5-year investigation discovered that US Bank had been misappropriating customer data for over a decade, stealing their information and using it to forge bank accounts to inflate sales numbers.
The bank has been fined $37.5 million – plus interest, which will be distributed to customers affected by its breaches of the United States consumer protection laws.
Amidst the allegations, US Bank is currently working on a deal to acquire the retail business of Japanese major bank MUFG, a deal disclosed almost two years ago.
Speculations around the deal suggest the recent scandal is a key reason for the delay, with the possibility of MUFG backing out due to the US Bank’s tarnished image.
