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Enforcement

Explainer: Compensating consumers for Bank of America’s illegal tactics for credit card add-on products

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Today we’re fining Bank of America, N.A. and FIA Card Services, N.A. for unfairly billing consumers for services relating to identity theft protection “add-on” products and for using deceptive marketing and sales practices for credit protection “add-on” products.

We are also ordering Bank of America to refund fees and provide other redress to consumers. Approximately 2.9 million consumers will be receiving or already have received up to $727 million in refunds for fees they paid for these products and services as well as additional redress.

If you’re impacted by the announcement, you don’t have to take any action to receive a credit or check. If you are one of the consumers affected by the order, Bank of America should have already notified you or will notify you directly. If you have questions about whether you are entitled to a refund, you can contact Bank of America.

Who is eligible for compensation?

Nearly 1.4 million consumers have already received or will receive refunds of at least $250 million in fees for the “credit protection” products (Credit Protection Plus and Credit Protection Deluxe). You will receive refunds if you are a Bank of America customer who enrolled in these products at any time over the phone, were charged a fee between October 1, 2010 and March 31, 2013, and either did not activate benefits or who had  a request for benefits denied.

Approximately 1.5 million consumers purchased the “identity theft protection” products (Privacy Guard, PrivacySource, and Privacy Assist) and were improperly billed for services that were not performed. As a result, consumers paid at least $459 million in fees, interest, and over-limit charges for these products without receiving full services. Today’s announcement recognizes the refunds Bank of America has already provided to consumers harmed as a result of the illegal billing practices relating to these identity theft protection products.

Eligible consumers who were enrolled in the “identity theft protection” products received refunds if they enrolled in these products between October 2000 and September 2011 but did not receive full credit monitoring services, received only partial credit monitoring and/or credit report retrieval without notice, and/or didn’t receive credit report retrieval benefits.

What do eligible consumers get?

That depends on the product consumers were enrolled in and some other factors.

Eligible consumers who were enrolled in a “credit protection” product for less than a year, who made a request for benefits that was denied or closed, or who, complained to the CFPB or to Bank of America stating that they did not authorize enrollment in the product, will receive a refund of all fees charged from October 1, 2010 through March 31, 2013. Eligible consumers who were enrolled in a “credit protection” product for a year or more and who do not fall within any of the groups described above will receive a refund of 300 days of fees charged from October 1, 2010 through March 31, 2013.

Some consumers who were enrolled in “credit protection” product will also receive:

  1. A reduction in charged-off balances due to product fees charged from October 1, 2010 through March 31, 2013.
  2. “Credit protection” services for six months at no-cost for consumers enrolled in the product as of March 1, 2013.

Bank of America has already completed reimbursement for the “identity theft protection” eligible consumers, so eligible consumers should have already received refunds. If you have questions about receiving a refund for this product, you can contact Bank of America.

Bank of America is responsible for providing refunds

Watch out for scammers claiming they will get you a refund. When large numbers of consumers get refunds, scammers sometimes pop up. The scammer may charge you a fee or try to steal your personal information. If someone tries to charge you, tries to get you to disclose your personal information, or asks you to cash a check and send a portion to a third party in order to “claim your refund,” it’s a scam. Please call us at (855) 411-CFPB to report the scam.

We’re protecting students from predatory lending

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Today, we filed a lawsuit against ITT Educational Services, Inc., accusing the for-profit college chain of predatory student lending. We believe that ITT used high-pressure tactics to push many students into expensive private student loans that were likely to end in default.

This is our first public enforcement action against a company in the for-profit college industry.

“Today’s action should serve as a warning to the for-profit college industry that we will be vigilant about protecting students against predatory lending tactics,” said Director Richard Cordray.

You can read the press release, read Director Cordray’s full remarks, and view the formal complaint against ITT.

You can also watch a recording of today’s press conference.

Ally to repay $80 million to consumers it discriminated against

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When you shop for a car, auto lenders work with your auto dealer to offer you financing for your loan. Auto lenders consider the terms of your loan, your credit history, and other factors, to set a risk-based interest rate on your loan.  Many of them have policies that allow an auto dealer to “markup” that interest rate. Lenders use a part of that markup to compensate dealers for the valuable services they perform in arranging financing. Unfortunately, that creates incentives for dealers to charge higher interest rates and may be implemented in a way that results in illegal discrimination.

Ally Financial Inc. and Ally Bank have markup policies that have resulted in illegal discrimination against over 235,000 African-American, Hispanic, and Asian and Pacific Islander borrowers.

Today, along with the Department of Justice (DOJ), we’re ordering Ally Financial Inc. and Ally Bank to pay $80 million in damages to the consumers that were harmed by their discriminatory markup policy between April 2011 and December 2013.

Ally will pay a settlement administrator to contact consumers who are due to receive compensation. Along with the DOJ, we will identify victims and calculate their damages by looking at loan data.

Protections against discrimination

Remember, it’s illegal for a creditor to discriminate in any aspect of a credit transaction based on certain characteristics. If you believe a lender has discriminated against you for any reason, you can submit a complaint online or by calling (855) 411-2372.

You can learn more about the warning signs of discrimination and what you can do to protect yourself.

Protect yourself

In the meantime, watch out for scammers claiming that they will get you money. When large numbers of consumers get damages, scammers sometimes pop up. The scammer may charge you a fee or try to steal your personal information. If someone tries to charge you, tries to get you to disclose your personal information, or asks you to cash a check and send a portion to a third party in order to “claim your refund,” it’s a scam. Please call us at (855) 411-CFPB to report such scams.

Explainer: What the multi-billion dollar Ocwen enforcement action means for you

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Along with authorities in 49 states, and the District of Columbia, we’re filing an order requiring the largest nonbank mortgage loan servicer in the country, Ocwen Financial Corporation, to pay for years of systemic misconduct in mortgage servicing. The misconduct included unfair shortcuts, unauthorized fees, deception, illegal foreclosures, and other illegal practices. Ocwen will be required to provide $2 billion in loan modification relief to its customers and $125 million in refunds to consumers whose homes were foreclosed.

Since 2009, Ocwen has been taking advantage of homeowners with shortcuts and unauthorized fees and deceiving consumers about loan modifications. We have mortgage rules that will take effect in January 2014 that establish strong protections for struggling homeowners facing foreclosure.

We have answers to some of your questions about this case:

Q: What is a mortgage servicer and how do I know if Ocwen services my loan?

A: The company that you make your monthly payment to is your mortgage servicer. Many of the loans administered by servicers are owned by third-party investors, so they may or may not be a lending institution and may or may not own your loan. A mortgage servicer administers mortgage loans, including collecting and recording payments from borrowers. A servicer also handles loan defaults and foreclosures, and may offer programs to avoid foreclosure to assist delinquent borrowers.

You can find out whether your mortgage is serviced by Ocwen by calling (800) 337-6695 or emailing your question to ConsumerRelief@Ocwen.com.

Q: How will I know whether this settlement affects me?

A: This settlement involves Ocwen and two companies recently purchased by Ocwen: Litton Loan Servicing LP and Homeward Residential Holdings LLC (previously known as American Home Servicing, Inc. or AMHSI). If your loan was serviced by Ocwen, Litton, or Homeward, you lost your home to foreclosure between Jan. 1, 2009 and Dec. 31, 2012, and if you meet other criteria, the settlement administrator will mail you a notice letter and claim form.

For loan modification options, you may be contacted directly by Ocwen. You can also contact Ocwen for information about specific loan modification programs and find out if you will be impacted by this settlement. You can reach Ocwen by calling (800) 337-6695 or emailing ConsumerRelief@Ocwen.com.

Q: Will there be payments to foreclosure victims?

A: Yes. The settlement administrator will mail Notice Letters and Claim Forms to borrowers who lost their home due to foreclosure between January 1, 2009 and December 31, 2012, whose loans were serviced by Ocwen, Homeward, or Litton, and who meet other criteria. Borrowers who receive payments will not have to release any claims and will be free to seek additional relief in the courts.

Q: How do I know if I am eligible for payment as a foreclosure victim?

A: You are eligible if you meet the following requirements:

  • Your home was foreclosed between January 1, 2009 and December 31, 2012.
  • At the time of foreclosure, the loan was serviced by Ocwen, Homeward, or Litton.
  • You made at least three payments on the loan.
  • You lived or intended to live in the property as your principal place of residence at the time of the origination of the loan.
  • The property was a one-to-four unit residential property.
  • The unpaid principal balance of the first-lien did not exceed $729,750 for a one-unit property, $934,200 for a two-unit property, $1,129,250 for a three-unit property, or $1,403,400 for a four-unit property.
  • You make a valid claim.

Q: If I am eligible for foreclosure relief, how much will I get?

A: That depends. All consumers who successfully file eligible claims will receive an equal payment based on the total number of successful claims.

Q: What about those borrowers who continued making payments?

A: Borrowers who are current on their payments but are nonetheless struggling to make their payments and are “underwater” on their mortgages may qualify for loan modifications that will result in reductions in principal.

For loan modification options, borrowers may be contacted directly by Ocwen.

Borrowers can also contact Ocwen themselves to obtain more information about specific loan modification programs and inquire whether the borrower may be impacted by this settlement. You can reach Ocwen by calling (800) 337-6695 or emailing ConsumerRelief@Ocwen.com.

Q: What laws did Ocwen violate?

A: Ocwen is charged with engaging in unfair and deceptive acts or practices in violation of the federal Consumer Financial Protection Act and state laws. Ocwen’s unlawful conduct has resulted in injury to consumers who have had home loans serviced by Ocwen, Litton , and Homeward. The harm includes payment of improper fees and charges, unreasonable delays and expenses to obtain loss mitigation relief, and improper denial of loss mitigation relief.

We have some more answers to specific questions about the Ocwen settlement.

Our first enforcement action against a payday lender

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Today we’re announcing an enforcement action against payday lender Cash America International, Inc., one of the largest short-term, small-dollar lenders in the country. The company has agreed to reimburse up to $14 million to approximately 14,000 people for robo-signing practices related to debt collection lawsuits. The company will also pay a $5 million penalty for the violations and other misconduct.

Who is eligible for a refund?
You may be eligible for a full refund if you paid money because of a collections lawsuit from January 1, 2008 through October 1, 2012 to any of the following companies:

Ohio Neighborhood Finance, Inc., d/b/a Cashland

Cash America Pawn, Inc. of Ohio

Cashland Financial Services, Inc.

Cash America Net of Ohio, LLC

Ohio Neighborhood Credit Solutions, Inc.

CNU of Ohio, LLC.

If you have not already received your refund, or think you received the wrong amount of refund, please contact the company administering the refund no later than May 19, 2014. You can call them at (877) 524-8480 or find more information on their website: www.voluntaryloanrefundprogram.com

Problem with a payday loan?
You can submit a complaint online or by calling (855) 411-2372.

You can also get clear, unbiased answers to questions about payday loans on Ask CFPB.

Explainer: How does the Chase order handle refunds?

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Yesterday, we determined that Chase Bank USA, N.A. and JPMorgan Chase Bank, N.A. unfairly billed customers for services relating to identity theft protection products – including “Chase Fraud Detector,” “Chase Identity Protection (ChIPs),” and “Chase Identity Protection (IPS)” – in a way that violated federal law.

Chase has agreed to refund about $309 million to over 2.1 million Chase customers.

Chase customers are not required to take any action to receive their refund. Chase provided the refunds to the victims as an account credit or as a check in the mail.

If you are eligible for a refund and have an open account, the refund should have been automatically credited to your account. For most consumers, a credit should have appeared on your November or December 2012 statement as “ID/FRAUD PROTECT CREDT[Phone Number].” If you are eligible but no longer had an account with Chase as of October 2012, a check should have been mailed to you by the end of November 2012.

If you have questions about whether you are entitled to a refund, please contact Chase.

Watch out for scammers claiming they will get you a refund. When large numbers of consumers get refunds, scammers sometimes pop up. The scammer may charge you a fee or try to steal your personal information. If someone tries to charge you, tries to get you to disclose your personal information, or asks you to cash a check and send a portion to a third party in order to “claim your refund,” it’s a scam. Please call us at (855) 411-CFPB.