Security

US Bank faces $37M fine for opening fake accounts

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August 2, 2022

The Consumer Financial Protection Bureau has charged U.S. Bank with a $37.5 million fine for illegally accessing credit reports and opening accounts without user's permission. Employees at the bank allegedly faced pressure to meet sales goal, so they opened the accounts illegally, according to a report by CNN.

In particular, U.S. Bank employees would open deposit accounts, credit cards and lines of credit with high fees and interest rates that they would then pass on the consumer. The CFPB said investigators found the bank was aware of this practice and did not have standards in place to prevent these fake accounts.

"For over a decade, U.S. Bank knew its employees were taking advantage of its customers by misappropriating consumer data to create fictitious accounts," Rohit Chopra, director of CFPB, said in a press release.

U.S. Bank claims it has "made process and oversight improvements," since 2016 and employees only get incentives for accounts when customers use the service. It argues that this issue is from a small percentage of accounts back in 2010.

The CFPB meanwhile said that often customers are left with the bill due to these accounts, as they have to close them and seek refunds.

"U.S. Bank's conduct harmed its customers in the form of unwanted accounts, negative effects on their credit profiles, and the loss of control over personally identifiable information," the CFPB said in a release.