US Bank to pay $57 million over ‘add-on’ products

WASHINGTON, Sept 25 (Reuters) - U.S. financial regulators said on Thursday that US Bank will pay about $57 million to resolve allegations it charged consumers for services they did not actually receive.

The U.S. Office of the Comptroller of the Currency and the Consumer Financial Protection Bureau said the bank, a unit of US Bancorp, would pay a total of $9 million in fines and about $48 million in restitution to harmed borrowers.

The bank offered identity theft protection and credit monitoring services as 'add-ons” to mortgages and checking accounts. Some borrowers were billed for the services even though they never activated them, and some paid for the products for years without receiving any benefits, regulators said.

Bank regulators have been cracking down on marketing and billing practices tied to these extra products. The consumer bureau said it has taken seven enforcement actions involving such products, including fines against Bank of America, JPMorgan Chase and Discover.

'We have consistently warned companies about practices related to add-on products and we will do what is necessary to prevent further harm to consumers,” CFPB Director Richard Cordray said in a statement on Thursday.

US Bank neither admitted nor denied the findings.

Regulators said the add-on products were marketed by US Bank and sold by a third-party vendor. Dana Ripley, a spokesman for the bank, said US Bank ended its relationship with the vendor, Affinion Group, two years ago.

'We will be compensating customers who did not receive full services from Affinion, and providing our apology,” Ripley said.

Affinion also provided services to Capital One Financial, which was fined in 2012 by financial regulators over add-on products. A spokesman for Affinion did not immediately respond to a request for comment.

The consumer bureau was created by the 2010 Dodd-Frank law and charged with overseeing products such as mortgages and credit cards. The OCC oversees national banks.

Regulators said US Bank must provide refunds to more than 420,000 customers who paid for services they did not receive. It also must improve its oversight of add-on products and outside service providers, the agencies said. (Reporting by Emily Stephenson; Editing by Bill Trott and Dan Grebler)