U.S. Bancorp, or U.S. Bank, will be reimbursing $48 million after federal regulators found that the bank has unfairly charged over 420,000 customers for services of identity protection and credit monitoring that the customers did not receive.
In addition to the reimbursement to customers, U.S. Bank will pay a penalty of $5 million to the Consumer Financial Protection Bureau and $4 million to the U.S. Office of the Comptroller of the Currency.
The total reimbursements and penalties to be paid by U.S. Bank is $57 million.
U.S. Bank sold the add-on services "Identity Secure" and "Privacy Guard" to customers for their credit cards and other products from at least the year 2003 until January of 2012, according to information released by the CFPB.
The two programs, which were controlled by third-party supplier Affinion, had the written authorization of the customers as a requirement for the services to begin.
In many instances, the authorization was not properly processed or was delayed. The CFPB also said that the customers began to pay for the services immediately upon enrollment.
The discrepancies resulted in customers being charged for services that they were not receiving, in some instances over several years. Some customers were also forced to exceed the account limits of their credit cards as a result of the improper charges, which further added fees to their credit card bills.
In addition, some customers wrongly believed that their accounts were being monitored for fraud and identity theft. In reality, the services were not being performed or were only partially given.
"We have consistently warned companies about practices related to add-on products, and we will do what is necessary to prevent further harm to consumers," said Richard Cordray, CFPB Director.
U.S. Bank said that it is in regret of the errors that it made involving its provider Affinion and its Trilegiant subsidiary.
According to the bank, it immediately acted upon the issue as soon as it was made aware of two years ago by cutting off the relationship with Affinion, in a bid to protect its customers.
The penalties placed upon U.S. Bank are the latest of a series of enforcement actions by the CFPB that looks to address questionable add-on products and services offered by banks.
American Express, Bank of America, Capital One, Discover and JPMorgan Chase previously received penalties collectively amounting to over $1.4 billion in consumer reimbursements for similar issues.