Some credit-card holders are unknowingly paying for identity-theft protection and related services. Cardholders, especially those who signed up for a new card over the past few years, should check their statements for fees related to services that they may not have asked for and may not want.
In an action announced Thursday, federal regulators fined U.S. Bancorp USB -1.43%
$9 million and required it to return $48 million to customers over
“illegal billing practices” related to the bank’s identity-theft
products. The customers were signed up without th
eir consent and in many
cases didn’t actually receive the promised service, the Office of the
Comptroller of the Currency and the Consumer Financial Protection Bureau
The action follows related orders by the CFPB and the OCC against Bank of America BAC -1.86% and J.P. Morgan Chase JPM -2.01%.
When consumers sign up for a credit card, most issuers will offer
so-called identity-theft protection services and credit-monitoring
services that are supposed to inform cardholders of possible signs of
fraudulent activity on their cards. The pitches have picked up over the
past four years as large data breaches at retailers and elsewhere have
increased, compromising more consumer information. Issuers’
customer-service call centers also pitch the services to existing
cardholders, as do many automated call services customers contact to
activate their cards.
One problem: Many issuers have been enrolling new cardholders in
these services without the proper authorization, and those consumers are
often unaware that they’ve signed up for them or that they’re being
If cardholders see such charges on their statements they should go
through their previous statements to find out how long they’ve been
charged. Consumers who didn’t sign up for these services and don’t want
them should contact their issuer and ask for a refund. If that doesn’t
work, they can file a complaint with the CFPB on its website.
The services themselves, which cost around $10 to $30 a month, have some drawbacks.
They can’t prevent identity theft. And even if consumers make no other
charges on their card, they’ll still need to pay this or incur late
Consumers can take steps on their own to track their credit for free.
They can ask credit-card issuers to alert them by phone about charges
beyond a certain dollar amount—a free service. They can check their
credit report from each of the three major credit-reporting firms for
free every 12 months at AnnualCreditReport.com.
They can also place a “fraud alert” on their credit report with one
of the credit-reporting firms. In that case, lenders will take extra
steps to confirm the identity of the person applying for credit in their
Credit experts say the add-on services tend to help banks more than
consumers. They require little legwork for the banks, which market the
services but rely on other companies to provide them. For banks, the
services have provided an extra source of revenue at a time when
generating fee income from checking accounts and credit cards has become
harder due to recent regulations. In contrast, these services are
largely unregulated, though recent regulatory actions could result in
banks being more cautious about how they proceed in this space.
Original article can be found here.