Bank of America Corporation
) 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.
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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.
Capital One Financial Corp.
American Express Company
) and Discover Financial Services.
BofA currently carries a Zacks Rank #3 (Hold).