CFPB Requires Big Bank to Pay $9 Million as Penalty for Unlawful Credit Card Servicing

​On Tuesday May 23, the CFPB announced it had reached a settlement ​ with a large bank to resolve allegations that the bank had violated consumer protection laws in connection with credit card transactions. The CFPB alleged that the bank “failed to properly manage and respond to customers’ credit card disputes and fraud claims.” The settlement brings to an end a lawsuit that was filed in 2020​ in which the CFPB alleged the bank violated the Truth in Lending Act (and its implementing Regulation Z) by: (1) improperly denying customer reports of fraud and errors and failing to provide refunds and (2) failng to provide required documents and refferals to customers who had submitted billing errors.

​In addition to paying a $9 million fee, the settlement requires the bank to take steps to bring its credit card program into compliance, including “prohibiting its employes from requiring customers to provide a fraud affidavit signed under penalty of perjury in support of a credit card claim” and ensuring that it refunds any fees or other charged amounts in response to valid billing error notices and unauthorized use claims.

The parties await entry of the settlement by the U.S. District Court for the District of Rhode Island.