$9 Million Settlement Reached in CFPB Action Over Unlawful Credit Card Servicing

The CFPB and a large national banking association recently reached a settlement regarding allegations that the bank violated TILA and Regulation Z by failing to properly investigate and respond to billing error notices and unauthorized use claims, not adequately crediting customer accounts, and failing to provide customers with required credit counseling referrals.

The CFPB’s complaint challenged the bank’s process for reporting billing error notices and unauthorized use.  The CFPB alleged that the bank required steps not required by TILA, such as requiring consumers to send a notarized fraud affidavit with their claims.  Further, customer accounts were not always refunded all the finance charges or fees owed to them after unauthorized use or billing errors occurred.

The lawsuit also alleged certain consumers, who submitted billing error notices, were not provided with the required acknowledgement and denial notices.  Additionally, the CFPB alleged the bank’s designated toll-free number for credit counseling referrals failed to provide the required information, and consumers were either sent to general customer service or the collections department depending on whether their account was in good standing.

Per the stipulation, the bank must ensure their credit practices comply with TILA requirements and pay a $9 million fine to the CFPB’s Victim’s Relief Fund. 

The bank neither admitted nor denied the allegations in the complaint.