US bank fined for opening ‘dummy’ accounts for clients
US Bank, which is based in Minneapolis and has more than $559 billion in assets, pressured its employees to meet sales targets as part of their job requirements, offering them incentives to sale of banking products, the regulator said. In order to achieve these goals, bank employees illegally accessed customer credit reports and personal data to open accounts without authorization, the investigation found.
The CFBP announced Thursday that it had fined US Bank $37.5 million after a five-year investigation.
“For more than a decade, US Bank has known that its employees were taking advantage of its customers by misappropriating consumer data to create fictitious accounts,” CFPB Director Rohit Chopra said in a press release.
In a statement to CNN Business, US Bank said it had “improved processes and oversight” since 2016 regarding sales practice issues. Employees now receive incentives only for accounts where the customer uses the service.
The settlement is “related to legacy sales practices involving a small percentage of accounts dating back to 2010,” US Bank said in a statement on Saturday. “We are happy to put this matter behind us.”
US Bank has over 2,800 branches across the United States.
The CFBP said its investigation had found evidence the bank was aware that its employees opened accounts without the authorization of customers and had not put in place measures to prevent and detect them. The bank’s sales campaigns and compensation programs rewarded employees for selling banking products, the agency added.
Regulators have found that the employees opened deposit accounts, credit cards and lines of credit high interest rates and high fees that were passed on to the customer.
“US Bank’s behavior has harmed its customers in the form of unwanted accounts, negative effects on their credit profiles, and loss of control over personally identifiable information,” the CFBP said in its statement, claiming that customers had been forced to close unauthorized accounts in their names and seek refunds themselves.