Banking Behemoth Hit with $250 Million Fine for Fraud
Banking Behemoth Hit with $250 Million Fine for Fraud
Plus, another penalty for EasyPay Finance - Financial Fraud Roundup, July 14, 2023
Consumer finance predators are out in full force - from big players like Bank of America to smaller outfits with business models built on deception.
Here’s more in this week’s Financial Fraud Roundup.
Bank of America has paid more than $1 billion in fines for malfeasance since 2014. The latest is a $250 million penalty for, among other things, opening customer accounts without authorization.
The Consumer Financial Protection Bureau (CFPB) announced that it is ordering Bank of America to provide $100 million in reimbursements to customers and pay $150 million in penalties following an investigation that found the bank charged millions in illegal fees and opened accounts without receiving customer permission.
“Bank of America wrongfully withheld credit card rewards, double-dipped on fees, and opened accounts without consent,” said CFPB Director Rohit Chopra. “These practices are illegal and undermine customer trust. The CFPB will be putting an end to these practices across the banking system.”
An Offer Too Good to be True
Imagine being offered a job training program with a promise of a six-figure job upon graduation. Then imagine being told there’s no upfront cost, and that if you don’t get a job making at least $60,000, you pay nothing.
It’s a win-win. If you land the promised job, you pay back a loan of about $25,000 over a period of years.
If you don’t end up with a job, you pay nothing.
Turns out, a company known as Prehired was using deceptive tactics to market student loans - students had to pay no matter what. When they didn’t, one of Prehired’s two debt collection companies would go after them.
Now, the Consumer Financial Protection Bureau (CFPB) is taking Prehired to court:
Prehired operated a 12-week online training program claiming to prepare consumers for entry-level positions as software sales development representatives with “six-figure salaries” and a “job guarantee.” Prehired drove interested applicants to sign an “income share” loan to finance the costs of the program and represented that consumers would pay nothing until they got a high-income job through Prehired.
The reality of the Prehired program was that students were obligated to pay even if they never received a job and, in fact, that payments were often increased without notice.
Purveyor of Predatory Puppy Loans Penalized in DC
EasyPay Finance, a lender focused on financing auto repair and pet purchases and care, is also notorious for charging up to 199% for its short-term, installment loans.
Now, EasyPay is being fined for violating interest rate caps in the District of Columbia.
“This investigation and settlement shuts down EasyPay’s practice of offering predatory loans at outrageously high interest rates to District borrowers,” said AG Schwalb. “Using out-of-state banks as a cover to attempt to circumvent District laws, EasyPay charged customers exorbitant interest rates averaging 163% APR - roughly 7 times higher than DC’s 24% limit - trapping consumers in cycles of debt that threatened to ruin their credit scores and financial security. My office will continue to aggressively enforce DC’s consumer protections to the fullest extent of the law and will pursue every avenue to prevent out-of-state lenders from evading the District’s interest rate cap.”