Senators seek answers from U.S. Bank about the crisis of fraudulent accounts

Democratic senators are requesting that U.S. Firm appear before a Senate committee to answer concerns surrounding an alleged false accounts scam that the bank just settled for $37.5 million.

Sen. Sherrod Brown (D-Ohio), chairman of the Senate Committee on Banking, Housing, and Urban Affairs, and several of his colleagues sent a letter to U.S. Bank CEO Andrew Cecere on Thursday expressing their "deep concern" over the bank's practise of "using consumer data to issue credit cards and lines of credit and to open deposit accounts for consumers without their knowledge or consent."

Committee members and Democratic Senators Elizabeth Warren (Mass. ), Catherine Cortez Masto (Nev.), Robert Menendez (N.J.), and Chris Van Hollen joined Brown in signing the letter (D-Md.)

U.S. Bank was fined $37.5 million in July by the Consumer Financial Protection Bureau (CFPB) for creating bank accounts and credit cards and accessing consumer credit reports without the knowledge or approval of existing customers. Employees at U.S. Bank were allegedly incentivized to open new accounts in order to fulfil sales objectives, according to the CFPB. Without admitting or denying guilt, the bank paid the fine.

As part of the settlement with the CFPB, U.S. Bank agreed to allocate greater resources to its compliance function and enhance its rules and processes for detecting and preventing unlawful sales actions or practises. The bank must submit to the CFPB a thorough compliance plan outlining the actions it will take to comply with the order.

In their letter, the senators connected the malfeasance at U.S. Bank to that at Wells Fargo, stating, “[T]his is the second time in less than a decade where the federal government has sought accountability and redress by a major bank for perpetuating this practice.”

Wells Fargo agreed to pay a $3 billion punishment in 2020 for its malfeasance, which entailed the unauthorised establishment of thousands of phoney client accounts. In 2016, Wells Fargo also paid the CFPB a $100 million fine. Fifth Third Bank is also accused by the CFPB of opening unlawful accounts in a case that has not yet been resolved.

Senators also outlined what they believe might be an additional avenue of inquiry: how U.S. Bank may have misappropriated personally identifying information of customers to construct the bogus accounts.

“Banks are entrusted with customers’ most sensitive information in support of applications for mortgages, loans, credit cards, deposit accounts, and financial services necessary to participate in the economy,” they wrote. “It is unacceptable that U.S. Bank provided incentives to and pressured its employees to take advantage of their unique access to a veritable treasure trove of sensitive, personal information to sign up unsuspecting customers for fee-generating financial products and services.”

The senators posed a number of questions to U.S. Bank and requested that a representative of the bank come before the committee on September 6. The senators want to know how many fake accounts were opened, how customer personal data was used to open them, how U.S. Bank's measurement of employee performance may have created incentives for the misconduct, if any of the employees who participated in the scheme are still employed by the bank, what senior leadership knew about the fake accounts and what they did with that information, and more.

Through a representative, U.S. Bank expressed its eagerness to react to the letter.

By fLEXI tEAM