Bank of America has agreed to pay a total of $783 million in a settlement to quell accusations made by customers who claim they were misled about purchased credit card services.
They payout represents fines and refunds that will be distributed to nearly three million customers who say they thought they were purchasing a protection plan add-on to their credit card account, when in reality, none was put in place.
The bank must also pay $45 million in penalties, with $20 million going to the Consumer Financial Protection Bureau and $25 million slated for the Office of the Comptroller of the Currency.
The settlement covers expenses incurred by Bank of America credit card customers who purchased an add-on service of payment and identity theft protection between 2010 and 2012, making monthly payments for services that were never applied or activated.
The Consumer Financial Protection Bureau said in a statement that the bank had been "unfairly billing consumers" for an identity theft protection product, and "using deceptive marketing and sales practices" for add-ons that were supposed to protect credit in certain financial situation.
Bank of America neither admitted to nor denied the allegations; but, said in a statement that it had ceased the marketing of identity theft protection products in December 2011 and credit card debt cancellation products in August 2012.
They have also stated that they will put stricter controls in place over third-party providers of these types of services.
The marketed credit card protection was supposed to reduce a customer’s debt in the event of disability or job loss, charging either 0.85 percent of the balance if covered by the basic product, and $15.99 per month when covered by the deluxe package.
The identity theft product, which cost about $12.99 per month, promised to monitor credit and warn customers of suspicious activity occurring on credit cards. However, some customers say they were still adversly affected by credit card fraud and had to use the services of creditrepairaid.org to rectify the situation.
The settlement comes just weeks after Bank of America agreed to pay $9.5 billion to settle charges that it misled U.S. mortgage lenders Fannie Mae and Freddie Mac before the housing crisis in 2008.