Bank of America Corporation (BAC - Free Report) is trying to resolve matters with Consumer Financial Protection Bureau related to its alleged malpractices in credit-card add-on product sales, according to a Bloomberg report. The banking major was accused of providing low value services like credit monitoring and debt cancellation at a very high price.
According to the National Consumer Law Center, credit monitoring information is available free of cost. However, BofA and some other banks simply replicated the information for customers with a price tag. Further Austin, Texas-based Center for Economic Justice stated that debt cancellation service is actually worthless for consumers.
BofA may have to reimburse customers with the entire amount that they were charged. However, nothing has been confirmed yet as the settlement talks are still in progress.
BofA is reluctant to pay the total penalty fee (exact amount not known) as it claims to have already compensated consumers who did not receive the promised benefits. This has been confirmed by anonymous sources well versed in the matter. Moreover, BofA has discontinued the aforementioned services as well.
The add-on products, one of the sources of income for large financial institutions, have often faced criticism from consumer forums across the world. This is because the terms and conditions related to these products are often not clear and consumers are enlisted as buyers without their knowledge at times. Therefore, regulatory check on these products is necessary and comes as a respite for customers.
Other financial institutions which faced similar charges include JPMorgan Chase & Co. (JPM - Free Report) , Capital One Financial Corp. (COF - Free Report) , American Express Company (AXP - Free Report) and Discover Financial Services.
BofA currently carries a Zacks Rank #3 (Hold).