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August 25, 2016

CFPB: Bank to pay $32.25M for illegal credit card practices

First National Bank of Omaha was ordered by CFPB to pay $27.75 million in relief to about 257,000 consumers harmed by the institution's illegal practices with credit card add-on products. The bank will also pay a $4.5 million civil penalty to the bureau.

CFPB says the bank used deceptive marketing techniques to get consumers into debt-cancellation add-on products and also charged consumers for credit monitoring services they did not receive.

From 2002 until at least 2012, CFPB found that the bank said the add-on products would provide a monthly payment to the cardholder's account in the event of certain hardships, such as involuntary unemployment or disability. Cardholders were charged a monthly fee for the products. 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.

Furthermore, the bureau found the bank failed to disclose consumers' ineligibility for the debt cancellation products, hindered consumers from obtaining debt cancellation product benefits and made cancellation of these debt cancellation products difficult.

Along with paying $32.25 million in penalties, First National Bank of Omaha must also end unfair billing and other illegal practices.