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Fair Credit Reporting Act
The Fair Credit Reporting Act ( FCRA ) addresses the obtention of consumer credit reports . These are also to be obtained only with the express consent of the consumer . If not directly requested by the consumer themselves , there must be clear disclosure and notice that the report generation is a necessary aspect for the product or service . These reports must be used in connection with a consumer ’ s credit transaction , or an account review , and may only be used for the purpose the consumer has given explicit consent to . Unauthorized credit report pulls can harm the consumer ’ s own credit score and history , and implies a breach of privacy and trust by the offending financial institution .
Trust in Savings Act
The Truth in Savings Act ( TISA ) covers disclosures of rates of interest and fees so consumers have enough information to make informed and meaningful comparisons between competing depository institutions , specifically regarding deposit accounts . Regulation DD ( Part 707 of NCUA Rules and Regulations ), which implements TISA , requires annual percental yield and interest rates to be disclosed to the consumer — along with the specific information regarding compounding and crediting information , balance information , fees and others . TISA mandates these disclosures must be given before account opening , or before a service is provided , whichever comes first . Opening unauthorized consumer deposit accounts and failing to provide the required disclosures to the consumer is a violation of TISA and Regulation DD . TISA and Regulation DD disclosures should be readily available to prospective account openers , and should be uniform and standard procedure for employees who have authorization to open accounts .
Consumer Financial Protection Act
The Consumer Financial Protection Act ( CFPA ) prohibits unfair , deceptive , or abusive acts or practices engaged in by a financial institution . These practices can be anything from not disclosing interest rates or fees , to discriminating against certain consumers , to taking advantage of consumers who may not have the necessary information to make an informed decision about their account . Additionally , the CFPA states it is unlawful for covered persons , in this case , financial institutions , to “ offer or provide to a consumer any final product or service not in conformity with federal consumer financial law , or otherwise commit any act or omission in violation of a federal consumer financial law .” This covers general situations in which an institution is in violation of another consumer financial regulation . Any time they are facing a violation of another regulation , CFPA automatically covers that action . This means a TILA , TISA , FCRA or any other regulatory violation can bring in the CFPA .
Incentive-Based Sales Practices and the Law
Employees and employers are often familiar with incentive-based programs . They often boost sales and revenue , expand the customer base and increase employee efficiency . Some of these programs are benign , offering additional perks to employees who perform such as small prizes , food , outings or vouchers . However , some rewards and incentive programs can be deceptive and subversive .
According to the consent order regarding U . S . Bank , it began a program to increase sales of certain “ Consumer Financial Products or Services ” by implementing an incentive-based compensation program for its employees . Sales of those products or services also began to factor into employee performance evaluations . These incentivebased programs included point systems , and valued different services and products differently , placing a higher value on some , rather than others . They also point values corresponded with the revenue generated from each product .
Employees of U . S . Bank were then , according to the consent order , pressured to sell more products , as doing so was in the interest of the bank and its employees . After the system was launched , employees were found to be opening a small number of sham accounts , submitting fake applications to issue credit cards , and opened lines of credit linked to customers ’ accounts without their knowledge or consent . Each of these actions constituted a violation of a consumer financial protection regulation .
These new accounts generated revenue for U . S . Bank and often incurred fees from the products . The customers affected did not know . After a 2016 assessment found inadequate account opening processes , they updated their procedures to bolster security . Once the systems were updated , the number of sham accounts and
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