Dive Brief:

• The Consumer Financial Protection Bureau (CFPB) fined U.S. Bank $37.5 million for illegally accessing its customers’ credit reports and opening checking and savings accounts, credit cards and lines of credit without their permission, the bureau announced Thursday.
• The Minneapolis-based bank pressured and incentivized employees to sell multiple products and services to customers, including imposing sales goals as part of employee job requirements, the CFPB alleged.
• The CFPB said its investigation found evidence the $559 billion-asset bank was aware that sales pressure was leading employees to access customers’ credit reports and personal data to apply for and open unauthorized accounts. In turn, the bank had inadequate procedures to prevent and detect such accounts, the agency said.

Dive Insight:

“For over a decade, U.S. Bank knew its employees were taking advantage of its customers by misappropriating consumer data to create fictitious accounts,” CFPB Director Rohit Chopra said in a statement Thursday. “We all must do more to hold lawbreaking companies accountable when they abuse and misuse our sensitive personal data.”

Thursday’s settlement is related to legacy sales practices involving a “small percentage” of accounts dating back to 2010, U.S. Bank told Banking Dive in a statement.

“Since 2016, the Bank has made process and oversight improvements that have been effective in addressing these sales practices concerns,” the bank said. “The action by the CFPB closes out a 5+ year investigation. We are pleased to put this matter behind us.”

The $37.5 million penalty the bank is paying the CFPB will be deposited into a relief fund for victims, the bureau said.

The bank must forfeit and return all unlawfully charged fees and costs to harmed customers and develop a plan to make them whole by returning those fees and costs, plus interest, the bureau said.

U.S. Bank has emerged as the latest lender whose sales goals have allegedly incentivized employees to create sham accounts. 

Wells Fargo has been handed numerous enforcement actions and penalties tied to its own fake-accounts scandal from 2016. Reports of similar consumer abuses at TD Bank caused Sen. Elizabeth Warren, D-MA, last month to urge the Office of the Comptroller of the Currency (OCC) to block the bank’s $13.4 billion acquisition of First Horizon.

A May 4 Capitol Forum report claims the Toronto-based bank instituted a point system that pressured employees to open as many accounts as possible or risk lost bonuses or firing, allegations the bank said were unfounded.

“Our business is built on a foundation of ethics, integrity and trust. As part of routine and ongoing monitoring, TD Bank has not identified any systemic sales practice issues at any time,” the bank said in a statment to Banking Dive. “In fact, the OCC examined sales practices across large and midsize national banks and federal savings associations from 2015 to 2018. As stated by then-Comptroller [Joseph] Otting in a letter to Senate Democrats in January 2018: ‘The horizontal review did not identify systemic issues with bank employees opening accounts without the customers' consent."

“Our compensation practices – which place a heavy emphasis on customer satisfaction – are carefully and actively managed,” the bank added.