OCC Assesses $35 Million Penalty for Alleged UDAP Violation

April 15, 2016

On Wednesday, April 13, 2016, the Office of the Comptroller of the Currency (OCC) assessed a $35 million penalty against HSBC Bank USA, N.A. and ordered the bank to identify and make restitution to the allegedly harmed customers.  The OCC claims the bank’s billing practices violated Section 5 of the Federal Trade Commission (FTC) Act, which prohibits unfair and deceptive acts or practices.  Customers eligible for restitution include those who were alleged to have been unfairly billed for CreditKeeper, a credit-monitoring product marketed and sold by the bank, its affiliate HSBC Bank Nevada, N.A, and their vendors. The restitution will be used to make whole those customers who enrolled in and paid for the credit-monitoring product between January 2004 and May 2012, but did not receive the full benefit of the product.

The OCC order also requires the bank to ensure compliance with the FTC Act, improve governance of third-party vendors associated with add-on consumer products, develop a risk management program for add-on consumer products marketed or sold by the bank or its vendors, and develop a consumer compliance internal audit program for add-on consumer products.