A Bad Bank Held Accountable
TD Bank fined $28 million for harm to consumer credit reports
Credit scores are a necessary evil. Information on consumer credit reports is used to determine both whether or not to extend credit and the cost of the credit. These reports may also be used to determine whether or not to rent to someone and are sometimes used in employment searches.
So, when a report is inaccurate, that can have disastrous consequences for consumers.
Of course, the credit reporting agencies have little incentive to respond to consumer complaints - after all, they work for the financial services industry.
That’s why it is troubling to learn that TD Bank reported inaccurate information about its customers to credit bureaus.
According to the Consumer Financial Protection Bureau (CFPB):
TD Bank reported inaccurate negative information about consumers to credit reporting agencies, including reporting delinquent balances or bankruptcies that had not happened. The result was a negative impact on the consumer's credit report, which impacted both the ability to borrow and the cost of obtaining credit.
Since TD got caught, they will now pay $8 million to harmed customers and a $20 million civil money penalty.
Horizon Card Services Harvested $45 Million for Useless Credit Card
For customers with limited access to credit, a secured credit card can be a way to build a credit history. That’s important, as noted above.
But what happens when that secured card is basically a money-extracting scam?
That’s the case with Horizon Card Services, according to the CFPB.
The cards offered by Horizon came with a $500 credit limit, but required $300 in fees (paid at $24.99/month). They also could only be used at Horizon’s online outlet.
In addition to the limited line of credit, consumers could only use the card at the Horizon Outlet, an online store owned and controlled by Horizon. The CFPB's investigation found that 94% of customers never used the card. Despite this fact, those customers paid some $45 million in fees to Horizon.
That’s why the CFPB is suing Horizon and seeking both money damages for harmed consumers AND a civil money penalty to discourage future bad action.
MORE CONSUMER NEWS
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