Van Hollen, Brown and colleagues call US bank for opening fake accounts

August 04, 2022

Today, U.S. Sen. Chris Van Hollen (D-Md.) joined Sen. Sherrod Brown (D-Ohio), chairman of the Senate Banking, Housing, and Urban Affairs Committee, and other members of the Banking Committee and Housing, Senators Elizabeth Warren (D-Mass.), Catherine Cortez Masto (D-Nev.) and Robert Menendez (DN.J.) in a letter to US Bank CEO Andrew Cecere requesting information on the bank’s use of consumer data to open unauthorized bank accounts. The letter comes after the Consumer Financial Protection Bureau (CFPB) fined the bank $37.5 million for illegally accessing consumer credit reports to open fake checking and credit accounts. , accrue costs and increase profits.

“It is unacceptable that US Bank has encouraged its employees to take advantage of their unique access to a veritable treasure trove of sensitive personal information to enroll unsuspecting customers in fee-incurring financial products and services,” he added. . write the Senators.

A copy of the letter is available here and below:

Dear Mr. Cecere:

We are deeply concerned about the misconduct reported by the US Bank National Association (“US Bank”) which resulted in the Consumer Financial Protection Bureau (“CFPB” or “Bureau”) issuing a Consent Order and a $37 $.5 million against US Bank for unlawfully using consumer data to issue credit cards and lines of credit and to open deposit accounts for consumers without their knowledge or consent. Disturbingly, this is the second time in less than a decade that the federal government has demanded accountability and reparations from a major bank for perpetuating the practice — since 2016, Wells Fargo has paid a $3 billion fine in pursuant to a settlement with the Securities and Exchange Commission. (“SEC”), in addition to a $100 million fine to the CFPB, $35 million to the Office of the Comptroller of the Currency (“OCC”) and a $50 million fine to the city and to Los Angeles County for illegally opening fake accounts for millions of customers without their approval.

The CFPB consent order tells a problematic story. According to the Bureau, US Bank, the nation’s fifth-largest commercial bank, sought to increase sales of its products and services by rewarding employees who met sales goals and generated more revenue for the bank through a program. incentive pay. Under this pressure, employees engaged in illegal activities using customers’ personally identifiable information to open deposit accounts, apply for and issue credit cards, and open lines of credit from 2010 to 2020. All of these products have generated costs and increased profits for US Bank – at the expense of its own customers. The CFPB found that these practices violated federal consumer laws and violated individual consumers’ control over the privacy of their data.

Banks are entrusted with customers’ most sensitive information to support applications for mortgages, loans, credit cards, deposit accounts and financial services needed to participate in the economy. It is unacceptable that US Bank offered inducements and pressured its employees to take advantage of their unique access to a veritable treasure trove of sensitive personal information to enroll unsuspecting customers in fee-incurring financial products and services. .

We request that US Bank brief Congressional staff on the matter. Additionally, to understand the full extent of the issue, we ask that you answer the following questions by September 6, 2022:

1. The number of unauthorized accounts opened from January 1, 2010 to present. In answering this question, please include the number of deposit accounts opened, as well as the number of credit cards and other lines of credit issued without the knowledge or consent of US Bank customers. Please provide a state-by-state breakdown. Are any of the fraudulently opened accounts, credit cards or lines of credit operational today?
2. The number of unauthorized accounts opened by US bank employees based on personal identification information of existing customers and the number of accounts opened in the name of new customers. The number of customers who opened unauthorized accounts in their name without their knowledge or consent.
3. Please describe how US Bank measured employee performance and made decisions to retain employees during the period of findings in the consent order, particularly with respect to employees who served customers directly and authorized new accounts. In answering this question, please describe how the incentive compensation program was factored into performance reviews and provide the terms of the incentive compensation program that rewarded employees for increased sales referred to in para. 8 of the consent order.
4. Are employees who have entered into the unauthorized account program still employed or otherwise retained by US Bank?
5. When were senior management and the board first notified of unauthorized account openings? Please describe in detail the first time US Bank became aware of unauthorized account openings. Please provide a timeline.
6. Please describe all steps taken by US Bank to contact affected consumers. In response to this question, please provide the following:
1. The date US Bank notified affected customers of the fraudulent account opening.
2. The date that US Bank closed the fraudulently opened accounts.
3. The date that US Bank reimbursed customers for fees paid on these fraudulently opened accounts.
4. The outreach method used by US Bank to notify affected customers.

7. The total revenue generated by US Bank from the creation of unauthorized accounts.
8. Please describe in detail the internal safeguards that US Bank had in place to protect against these practices.
9. For consumers whose credit records and ratings have been damaged due to unauthorized account activity, please detail the steps US Bank plans to take to remedy the damage to customers’ credit records and ratings .
10. Please describe the data privacy protections instituted by US Bank since the CFPB issued the Consent Order to protect sensitive consumer financial data and information within US Bank.

The Committee plans to hold its annual hearing on Wall Street oversight in September of this year and we look forward to your participation.