Federal financial regulatory authorities have on Thursday ordered U.S. Bank to pay a fine of $57 million for allegedly failing to deliver identity theft protection to customers who paid for the service for nearly a decade.
According to the Office of the Comptroller of the Currency and the Consumer Financial Protection Bureau, over 420,000 customers of the bank paid for the security benefit between 2003 and 2012 but did not receive the service.
Reports indicate that $48 million out of the $57 million fine will go to the customers as restitution, while $9 will go to the bureau.
Meanwhile, U.S. Bank officials have revealed that the problem is with the third party service provider Affinion. Dana Ripley, the bank's spokesperson told the press that "As soon as we became aware of the issues with Afinion, we took swift action to protect our customers, and ultimately, discontinued our relationship with Affinion approximately two years ago. We will be compensating customers who did not receive the full services from Affinion, and providing an apology."
Financial regulatory authorities have also ordered U.S. Bank to improve its system for monitoring the efficiency of services related to third party providers.
U.S. Bank, a subsidiary of U.S. Bancorp, is the fifth largest bank in the country and has won many awards and recognition for delivering top quality customer services. On Thursday, the bank also announced that it is expanding its freight payment service to Europe.
The clampdown on the bank is part of a series of punitive actions taken against US banks by federal financial regulatory authorities who have been investigating into the 'add-on' products of financial service providers in the country. Reports indicate that several other banks in the country - including JP Morgan and Bank of America - have also been leveled with fines.
The director of the Consumer Financial Protection Bureau (CFPB) Richard Cordray has noted that banks have been consistently cautioned about the "practices related to add-on products." He went on to note that the bureau will do continue to strive to protect customers.
The CFPB is an independent organization created after the 2008 financial crisis and charged with protecting the interests of customers in their transactions with financial institutions.
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