The Dangers of Incentive-Based Compensation
On July 28 , 2022 , the Consumer Financial Protection Bureau issued a consent order and a subsequent $ 3.75 million dollar fine to U . S . Bank National Association ( U . S . Bank ), a national bank with headquarters in Minneapolis , Minn . for practicing several unlawful acts and practices related to a variety of consumer protection regulations .
Each of these regulations has specific instructions for how financial institutions should handle situations with consumers to offer the most fair and transparent experience .
Truth in Lending Act
The Truth in Lending Act ( TILA ) covers credit cards . Specifically , the regulation directly states credit cards “ shall not be issued except in response to a request or application therefor .” The implementing regulation , Regulation Z , requires an oral or written request or application for any new cards , any card renewals or substitute cards . Issuing any credit cards without this express consent from the consumer indicates a violation of TILA and Regulation Z . Financial institutions must implement proper account opening procedures that align with the regulatory language and should be cognizant of the possibility of such unauthorized cards being issued .
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Unlawful Practices
• Issuing credit cards and lines of credit without the customer ’ s knowledge or consent .
• Using or obtaining computer reports of customers who were not seeking nor needed the information , where the Bank had no other permissible purpose for those reports obtained .
• Opening consumer deposit accounts without the customer ’ s knowledge or consent .
• Creating sales pressure on its employees , which the consent order determined to have led to these unlawful practices .
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