Stop montly withdrawal from my bank acc
Complaint
Mohammed Saad
Country: United States
I have received a monthly charge on my Bank of America account for $40 dated Feb09. I did receive a phone call claimed to be from Bank of America some time ago to try a certain insurance for a trial period. to be followed by more details.Nothing was received until I got a charge of $40 off my acc. I wrote to B of A who did not seem to know who the "merchant" was. I want to CANCELL this montly charge effective immediatly and the $40 charged to my acc reversed.
Thanks
Mohammed
Thanks
Mohammed
Comments
http://www.ussc.gov/agendas/0210hrng.pdf
UNITED STATES SENTENCING COMMISSION
PUBLIC MEETING AND HEARING
Regarding Telemarketing Fraud
Thurgood Marshall Federal Judiciary Building
One Columbus Circle
Washington, D.C.
Tuesday, February 10, 1998
http://www.ftc.gov/os/comments/dncpapercomments/supplement/minnag.pdf
"BEFORE THE FEDERAL TRADE COMMISSION
WASHINGTON, D.C.
Telemarketing Sales Rule Review
SUPPLEMENTAL COMMENTS OF THE
MINNESOTA ATTORNEY GENERAL’S OFFICE
FTC File No. R411001
...
1. The limits placed on chargebacks by the major credit card systems do not provide an effective control on preacquired account telemarketing.
At the TSR Forum, industry representatives suggested that the credit card systems effectively monitor abuses with preacquired account telemarketing by disciplining or expelling merchants who exceed credit card system limits on the allowable percentage of account chargebacks. Our investigations have shown that the credit card systems record as chargebacks only a minute percentage of the consumers who call to cancel unauthorized charges as a result of preacquired account telemarketing. The overwhelming majority of credit card holders who have their accounts credited for unauthorized charges obtain voluntary refunds that are not processed as a chargeback.
We obtained data on Minnesota customers of a major financial institution whose credit cards were charged during a three year period for membership clubs by one preacquired account seller. Of the 12,300 customers who canceled the ir membership during the first year and obtained a refund, over 99.8% of these refunds, 12,278 of the 12,300, were processed as a voluntary credit. Only 22 of the 12,300 refunds, or about .18%, were identified to the credit card systems as a chargeback.
There are at least two reasons for this discrepancy between extraordinarily high charge reversal rates and undetectable chargeback levels with general use credit cards. First, preacquired account sellers typically have a toll-free phone number on the line describing the charge that appears on the credit card bill. Some credit card issue rs affiliated with preacquired
account sellers have required in contracts with preacquired account sellers that the sellers include a toll- free number on all billing descriptors. Consumers are likely to call that number when they dispute the charge. A refund issued by the seller is a voluntary credit that is not counted in the
chargeback rate.
Second, the same result occurs when the customer contacts the financial institution rather than the seller. Our investigations have revealed that financial institutions regularly enter into agreements with preacquired account sellers that provide for the financial institution to refer to
the seller all customer calls about charges by the seller. In some cases, financial institutions have expressly agreed not to initiate chargeback procedures prior to such referrals. The following contract provisions are examples of contract terms between various credit card issuers and
preacquired account sellers:
[Bank] will not unilaterally charge back [seller] or credit the account of
any member when there is an inquiry involving the Services, unless [Bank] has
first notified the [seller] Customer Service Department and has given that
department the opportunity to resolve the problem directly with the member.
[Bank] will not unilaterally charge back [seller] or its vendors or credit the account of any purchasing [Bank] cardholder when there is an inquiry or
disagreement involving merchandise or services provided through the SERVICE
unless it has first given either [seller’s] membership services representative or the customer service department of the vendor providing the above merchandise and/or services the opportunity to resolve the problem directly with the member, subject to the requirements of the Fair Credit Billing Act, other applicable federal, state and local laws, and/or under MasterCard and Visa rules and regulations.
[Bank] shall make every effort to refer Cardmembers who have billing
disputes directly to [Insurance Company] within thirty (30) days of the receipt of such dispute, and shall specifically direct such disputes either in writing to Vice President of Customer Service, [Insurance Company] [address], or by telephone at 1-800-[XXX-XXXX]. However, in the event any Cardmember with a dispute does not wish to contact [Insurance Company] concerning said dispute, [Bank] shall provide to [Insurance Company] on a daily basis information concerning said dispute as mutually agreed upon by the parties. [Bank] agrees to utilize its best efforts to resolve billing disputes without initiating Chargebacks, but reserves the right to exercise any and all of its Chargeback and compliance rights as so defined by VISA and Mastercard operating regulations, or Regulation Z.
Some financial institutions have a “hotline” system so that consumer calls can be transferred directly from the customer service center at the financial institution to the retention department of the preacquired account seller. As one bank told its customer service representatives:
We prefer that cardmembers contact the Business Partner directly when
attempting to cancel. However, when a call comes into [Bank], we will attempt to re-route the call to the Business Partner via an abbreviated warm transfer, i.e., we introduce the caller and then the Business Partner handles the call.
At this same national bank, this process of avoiding chargebacks applies even if the customer expressly states that the reason for the request is that the charge was made without authorization:
Unauthorized Enrollment
Marketing and Third Party vendors have expressed their concern that we
are telling Cardmembers that we tape telemarketing calls. We should NOT
disclose this information, but INSTEAD refer the call to the vendor if the
Cardmember mentions the tape or other security verifications.
Please tell the caller that we apologize for the unauthorized billing to their account. Have them call [Club] at 1-800-[XXX-XXXX] (7 days a week, 24 hours a day, closed Christmas Day) to inquire about this, and to have a credit issued.
Even when the credit card issuer handles the calls itself rather than refers the call to the seller, credit card issuers routinely process the charge reversal as a voluntary refund rather than as a charge back. As one financial institution told its customer sales representatives: “If the
customer does not wish to cancel through the vendor, it may then be appropriate to cancel the membership ourselves. Additionally, Third Party programs must never be coded into dispute” (emphasis added).
These practices effectively circumvent the chargeback system for preacquired account sellers affiliated with the card issuer. For example, if a consumer calls a credit card issuer complaining of an unauthorized charge by a local department store, the consumer likely will be directed to fill out the form on the back of his or her credit card statement (or will be sent written
materials) that initiate the chargeback process. If the consumer calls about an unauthorized charge by a preacquired account seller affiliated with the credit card issuer, he or she likely will be referred to the seller or perhaps issued a direct refund not processed as a chargeback. In this
manner, preacquired account sellers are able to suffer extremely high cancellation rates from consumers complaining of unauthorized charges, yet often avoid incurring unacceptably high chargeback rates.
...
a. Unauthorized billing is the dominant reason for membership cancellation.
The data we have reviewed in our investigations uniformly supports our impression that underlying the high cancellation rates with preacquired account telemarketing is consumer sentiment that the charges were unauthorized. In addition to the survey of Fleet Mortgage Corporation customer service representatives presented in the prior NAAG Comments, an
investigation of a subsidiary of another of the nation’s largest banks revealed a similar pattern. During a thirteen month period, this bank processed 173,543 cancellations of membership clubs and insurance policies sold by preacquired account sellers. Of this number of cancellations,
95,573, or 55%, of the consumers stated “unauthorized bill” as the reason for the request to remove the charge. The other primary reason given for cancelling (by 56,794 customers, or 32% of the total) was a general “request to cancel” code that may have also included many consumers claiming unauthorized charges.
..."
This differs from the Wachovia case, where the fraudulent merchants were having extremely high chargebacks (practically all the charges were fraudulent) but Wachovia was tolerating the high rates because they were making so much off the fees.
The Intersections filing antiseptically describes the termination and cancellation rates, which are in the 30% to 40% range, but does not indicate anything about the reason for cancellations, or whether already collected amounts were refunded. They just make a data collection distinction between cancellations within 90 days, versus cancellations made later. They completely avoid any mention that consumers might be "cancelling" something they never authorized.
Why 90 days? Is it because that allows the 30 days to appear on the consumer's statement, plus 60 days for the Reg. E dispute period to have run, placing a legal barrier in the way of consumers attempting to obtain refunds?
High rates of cancellation due to unauthorized charges are a material factor to fail to disclose in any filing discussing recognition of income, as it indicates a material "risk" to that income stream of significance to investors.
Possible Sarbanes-Oxley violation.
Note repeated complaints alleging company claimed they sent some "information packet", but none was ever received.
Also note that when the bank is contacted, they are reported to discourage disputing through the bank, in one case claiming it isn't disputable under Reg. E, in another treating their customer as if the dispute was somehow not legitimate, generally refering the customer back to the telemarketer, even when the customer specifically refers to the transaction as "unlawful".
http://www.ripoffreport.com/Insurance-Companies/Smart-Step-Insurance/smart-step-insurance-bank-of-caa47.htm
"...he had agreed to read some information on their offer if they would mail him some. He NEVER agreed for the free trial or coverage, and never gave them any of our billing information. ..."
http://www.ripoffreport.com/Insurance-Companies/Smart-Step-Insurance/smart-step-insurance-intersec-db2w9.htm
"...First I called Smart Step. Smart step said I authorized the withdrawals and that they sent me a "policy" in the mail.( I am a licensed independent insurance agent and I own my own insurance agency! Why would I buy something I have never bought on my own or want? Why would I buy it through them and not get the commission on the sale?) I never received a "policy" because if I did I would have immediately called the State of Illinois on it and I never authorized the sale. ..."
http://www.ripoffreport.com/Miscellaneous-Companies/Smart-Step-Insurance/smart-step-insurance-i-recentl-d925q.htm
"...When I contacted bank of America they were unable to help me and I was only given a telephone number to call.
When I called 866-879-0179, they were identified as Bank of America. When I asked what kind of business this was they said its an accidental death insurance. I told them I had never signed up for anything and he proceeded to tell me that I had agreed by phone since 2007! ..."
http://www.ripoffreport.com/Insurance-Companies/Smart-Step-Ins/smart-step-ins-company-debite-894b7.htm
"...I called my banking system immediately to inform them of the unlawful transaction. The bank then instructs me to call the company and contact them about the transaction, which I also did. ...I have never spoken to this company, nor have I authorized them to deduct money from my account...."
http://www.ripoffreport.com/Miscellaneous-Companies/Bank-Of-America-Smar/bank-of-america-smart-step-p-4bffb.htm
"...The Bof A customer service people are trained to not react or respond and to be cool and polite when someone calls with this kind of complaint and demand to stop making payments and request for refund..."
http://www.ripoffreport.com/Sales-People/Smart-Step-Protector/smart-step-protector-insurance-b2ffa.htm
"...this company draft for 8 month 13,84 monthly from my bank america account I never authorize any draft from this company ..."
http://www.ripoffreport.com/Health-Insurance/SMART-STEP-INSURANCE/smart-step-insurance-monthly-s-f9ea2.htm
"...I spoke with these people several times on the phone (as they would not stop calling) and every time I made myself perfectly clear that I was not interested in anything they were selling and for them to not send me anything in the mail that I would have to cancel upon reciept. I signed nothing and never gave them permission to make these deductions. ..."
http://www.ripoffreport.com/Health-Insurance/Bank-Of-America-Smar/bank-of-america-smart-step-ins-a44dw.htm
"...I agreed to read the info they wanted to send out. Without explanation from Smart Step they enrolled my husband and me. I never received any further information from them and hit my checking for $40/month. After trying to track them down I got their number from BOA. Conversation after conversation they are unwilling to acknowledge that they neglected to send any paper work so that I could make a decision to accept or decline the offer. ..."
http://www.ripoffreport.com/Banks/Bank-Of-America-Smar/bank-of-america-smart-step-in-4f42w.htm
"...I noticed there was a $20. deduction from my checking a/c that I did not authorize. When checking closer, this started in June 2008 and continued each month through December 2008. ...I called the phone number listed on my bank statement (866-879-0179) listed beside the $20. deduction as "Smart Step". The woman informed me that an "investigation" would have to be conducted which would take 7-10 working days. ...
I asked the representative what company had drafted the money from my account and why. She was unable to answer my questions and instructed me to wait for the answer by mail. ..."
http://www.ripoffreport.com/Insurance-Companies/Smart-Step-Insurance/smart-step-insurance-bank-of-54cef.htm
"...I listened to the associate, and told her no, I was not interested, and I thought that was the end of it.
About two weeks later, I received a letter in the mail saying that I was enrolled in the policy. I quickly called them and canceled the policy, and explained that I had not signed up for it in the first place. Again, I thought that was the end of it.
This past weekend, December 6 2008, I found out that they have been charging my account $20 a month for the past year and a half. ..."
http://www.ripoffreport.com/Telemarketers/SMART-STEP-INSURANCE/smart-step-insurance-another-h-7md26.htm
"...my parents are in California, recently when i had a chat with my mom she told me about this thing, in which $40 per month are taken out of her bank account by the above mentioned company and as she told me she is quite sure that she never signed in or consented to anything that involves $40/month.. And she just noticed it recently while this thing is going on since Feb or Mar 07..."
http://www.ripoffreport.com/Miscellaneous-Companies/Smart-Step-Protcetor/smart-step-protcetor-insurance-95p2c.htm
"...Bank of America and Smart-Step Insurance are in bed together are ripping it's customer off with in thier insurance scams by making unauthorizing deductiion from my bank account...."
http://www.ripoffreport.com/Telemarketers/Smart-Step/smart-step-insurance-money-was-byy2w.htm
"...Smart Step took money out of my bank account without me authorizing it. ...I dont even know what type of insurance this is. I like to know how money can be debit from your acct without authorization. ..."
http://www.ripoffreport.com/Banks/Smart-Step-Insurance/smart-step-insurance-smart-ste-9e23a.htm
"...I discovered today that $40.00 had been deducted from my checking account by Smart Step Insurance. Neither my wife or I recoginzed Smart Step....I called my bank, Bank of America (BoA), and was informed that Smart Step were one of their affililiate companies that offered services to customers. I told BoA that I did not authorize the transaction and to my knowledge was not recieving any services. I asked that the auto deductions be stopped. BoA agreed to stop the deductions and suggested I call or write Smart Step and was given the phone number and address. ..."
http://www.ripoffreport.com/Insurance-Companies/Smart-Step-Insurance/smart-step-insurance-unauthori-9cen5.htm
"...I just today noticed $20 monthly charges from Smart Step on my bank statement. The charges go back to February 2008."
http://www.ripoffreport.com/Home-HealthCare/Smart-Step-Insurance/smart-step-insurance-fraud-cha-czab9.htm
"...I just found I've been charged for $20 every month over a year by this monkey business company.
I also found that this is a insurance that offered through BOA but I never actually hear or receive anything from them.
BOA told me , on a phone, that they can only go back 60 days but nothing more.
They said Federal Regulation E is only good for the charges to debid card but not the checking account. ..."
http://www.ripoffreport.com/Corrupt-Companies/Smart-Step-Protector/smart-step-protector-insurance-pfp47.htm
"...On august 8,07 I noticed that a debit card had been used for payment of 40.00. I hadn't used a debit in several days. So, I called them. They stated that my husband purchasec their accidential policy, via phone. A LIE. I called my bank and found that have been hitting me up for over a year. I never recieved the policy that they had claimed the sent. ..."
http://www.ripoffreport.com/Telemarketers/Smart-Step-Protector/smart-step-protector-insurance-427x3.htm
"...i emailed them and got a letter in the mail on June 21, 2007. they refered to their company as smart step protector inssurance product.
enrollment:telemarketing and said they mailed me a fullfillment package via first class mail. Innever received anything from them not even statement.Ido not know what type of product this is. ..."
Search on this 800 number finds this complaint in 2001, for an unauthorized charge for "Profile Protect". Disputing with both Discover and "Profile Protect" results in no reversal of the unauthorized charge, just late fees and interest added by Discover, with Discover just refering the customer back to Profile Protect.
Discover is refusing to reverse unauthorized charges as required by Reg. E, treating it as a "merchant dispute" despite clear evidence of fraud.
ProfileProtect claims to have a signature from "Alphonse" authorizing the charges. Customer claims Alphonse has been dead for 3 1/2 years, and even sends a copy of the death certificate.
Discover claims to have no idea where or how ProfileProtect got Alphonse's name, which was still on the account, although we know from the contract that Discover and Intersections had a marketing agreement on this type of product refering to this 800 number.
Discover refuses to cancel or block the charges, even though any "authorization" must have been invalid since the alleged person was already dead. They claim any cancellation must be through ProfileProtect.
ProfileProtect just keeps charging, even after receiving a copy of death certificate showing that the person they claim "authorized" the charges had been dead for 3 1/2 years, long before they claim they received "Alphonse's signature".
Discover "apologizes", but does nothing.
This fiasco plays out consistent with the outline presented by the Minnesota Attorney General, here:
http://www.ftc.gov/os/comments/dncpapercomments/supplement/minnag.pdf
Telemarketers got caught red handed, yet Discover and ProfileProtect just cover for each other and keep taking money.
2001 was before the tightening of FTC TSR rules covering authorization involving telemarketing with "pre-acquired account information". None the less, the practices continue today.
http://consumers.creditnet.com/Discussions/cr ... scam-17072.html
"...
>From: Baxxxx@attbi.com
>To: websupport@service.discovercard.com
>Subject: ProfileProtect Scam
>Date: 12/11/01 12:44:42
...
>Last month our bill came with a $8.99 charge for Profileprotect (monthly credit checking service) we didn,t even know what it was and called with in a half hour to Discover card..We got the big run a round and made several calls including this ProfileProtect..They keep forwarding our calls to ProfileProtect too..Finally Discover says it`s take in care off..
> Well, low in behold, this month the bill comes and $8.99 for ProfileProtect plus a $29.00 late charge and $1.25 late payment interest..ProfileProtect says we have letterhead signed by Alphonse only old AL`s been dead over 3 1/2 years..they were told all this before and this was suppose to be taken care of..
> Seven calls to Discover and they have been no help..I think ProfileProtect got the Alphonse name from Discover as they didn,t know he was dead and from what I understand they get a huge kick back..So I blame Discover card and still not resolved..We shouldn,t have to go through all this, we even sent ProfileProtect a death certificate as they said that was the only way they would quit charging us and it seems Discover won,t quit charging us unless ProfileProtect says its alright..Time to start using a different credit card...No more Discover...
..."
"...
Dear Dorothy Balxxxx
Thank you for your e-mail. I appreciate you taking the time to contact us. Profile Protect is not a product of Discover(R) Card, therefore, they will not accept a cancellation request from us in your behalf. Also, I do not know how they got your credit card number, or Alphonse's name. I apologize for any inconvenience you have experienced.
Any correspondence regarding this service will need to be through Profile Protect directly at 1-800-461-8836.
Please let me know if I can be of further assistance.
Sincerely,
Angie
..."
http://www.robtex.com/dns/mail.profileprotect.com.html
http://www.linkedin.com/in/jodypersky
Marketing Manager
Discover Financial Services
(Public Company; Education Management industry)
2000 — 2004 (4 years)
P&L accountability for ProfileProtect®, Discover’s credit bureau monitoring product – approximately $20 Million in net revenue annually for Discover Card. Directed marketing campaigns through mail, phone, Internet, outbound telemarketing, inbound telemarketing and statement channels.
Key Accomplishments: Implemented programs to improve Discover AccountGuard’s member retention rate from 2% to 19%. Managed key direct mail campaigns using Cashback Bonus.
..."
Similar problems with unauthorized "AccountGuard" charges, AFTER FTC "pre-acquired account info" telemarketing rules went into effect. (19% is a ridiculous retention rate, but "credit protection" is a ridiculous product.)
http://www.complaints.com/directory/2004/august/27/31.htm
http://epic.org/privacy/glba/nycitibank2.27.02.pdf
http://www.databasesystemscorp.com/tech-telemarketing_12.htm
"...
The following is an article relating to the telemarketing industry including products and services in our business areas.
Ethics and the Day of Reckoning for Direct Marketers
by Dean Rieck
This was written by special request for Direct Marketing Magazine back in 1998. While some of the examples are a little out of date, the point is still valid.
And it came to pass that direct marketing multiplied upon the face of the earth. And the vanity and wickedness of direct response advertisers became great. And the attorneys general looked upon the industry, and, behold, it was corrupt.
And in one voice the attorneys general spoke unto the sinners, saying, "I have given thee great persuasive power and thou hast used it not for good, but for evil." And a great cloud passed over the land. Lightning smote the mountain tops and the earth did tremble with thunder.
And the attorneys general said, "For thy wickedness I shall punish thee. Thou shalt offer up to me a portion of thy wealth. And I shall bind thy feet so that they may no longer walk in crooked ways. But wait, there's more! For I shall also twist and pull and hurt thy tongues, so that they may no longer speak lies except with a noticeable lisp so that all shall know thy deception."
And the marketing executives they did moan and wail. And the copywriters and consultants did gnash their teeth. And the creative directors did rend their designer shirts. And the nonprofit CEOs did wobble and faint upon the crush-resistant carpeting of their offices. And the publishers did find 27 quick ways to weep. And the telemarketers did cast down their predictive dialers and were struck dumb between the hours of 5 p.m. and 9 p.m. And the credit card marketers were not at all happy, though they suffered less since they were so busy mailing 83 pieces of plastic to every man, woman, and creditworthy college student each day.
And the land grew quiet and the cash registers sat idle. And the attorneys general they did smile, saying, "It is good."
* * *
A joke or a prediction?
I think it may be a prediction. And the day of reckoning may come sooner than we think. The signs are all around us ...
..."
http://www.johnroa.net/2008/08/28/i-hate-everything-volume-1/
It appears that Chase learned nothing from its 2006 settlement with 16 states Attorneys General. Note that under the terms of the settlement, obtaining "express consent" is a requirement for activating any product marketed to Chase's customers using information provided by Chase, and that such express consent could not have been obtained without actual contact with the consumers in th complaints above.
http://ag.ca.gov/newsalerts/release.php?id=1396&year=2006&month=12
http://ag.ca.gov/cms_attachments/press/pdfs/2 ... nt_Judgment.pdf
Also note that although Chase claims OCC has regulatory jurisdiction over it, not California (in this case), they acknowledge California's jurisdiction in connection with this settlement. There are probably similar terms in the other state agreements.
In disputing fraudulent charges showing up on Chase consumer accounts, complaints should be directed to both OCC and your state AG, particularly if your state is one of the 16 to reach this settlement with Chase.
http://dockets.justia.com/docket/court-txsdce ... case_id-697255/
"Gonzalez v. Bank of America N.A. et al
Plaintiff: Jorge Gonzalez
Defendant: Bank of America Insurance Services, Inc., BA Insurance Services, Inc., Intersections, Inc., Intersections Insurance Services, Inc., LOEB Holding, Corp, Global Contact Services, L.L.C., American International Group, Inc., National Union Fire Insurance Company of Pittsburgh, PA and Bank Of America, N.A.
Case Number: 4:2009cv02946
Filed: September 10, 2009
Court: Texas Southern District Court
Office: Houston Office [ Court Info ]
County: Harris
Presiding Judge: Judge Lynn N. Hughes
Nature of Suit: Other Statutes - Racketeer Influenced and Corrupt Organizations
Cause: 18:1961 Racketeering (RICO) Act
Jurisdiction: Federal Question
Jury Demanded By: Plaintiff
"Class Says BofA Targets Latinos for 'Joke' Insurance
By BRIDGET FREELAND
(CN) - Bank of America conspired with "predatory expert" Intersections Inc. and AIG to make tens of millions of dollars by coercing poor, Hispanic depositors to authorize automated withdrawals for purported insurance policies, whose benefits are so paltry they are "almost a joke," and whose real purpose is to fatten the bank's coffers, according to a RICO class action in Houston Federal Court.
The insurance coverage provided is "a pitiful excuse for insurance protection," and the "amounts that supposedly will be paid are small, and the conditions to their being paid at all are highly unlikely to ever occur," according to the complaint.
The class claims that since 2006 Bank of America has profiled its customer-victims, disclosed their confidential information to Intersections, and in turn received "almost $45 million out of the checking account deposits of its poorest customers."
Lead plaintiff Jorge Gonzalez, a native of Mexico who has limited education and English language skills, says he was a typical victim of the scam.
The class claims that when someone who fits Gonzalez's profile opens a Bank of America checking account, the bank sends the customer profile and deposit information to Intersections, "a predatory expert" whose main goal is to "increase the (bank's) bottom line."
Intersections hires a telemarketing company with native Spanish speakers, who call the BofA customers, claiming to represent the bank, to persuade them "to authorize, over the phone, the purchase of some form of insurance, usually ... accidental death or disability," the complaint states.
Once the telemarketer receives an OK from the customer, Intersections begins taking a "so-called 'premium'" out of their checking account, under the name "Smart Step," according to the complaint.
"Most of those withdrawals are divided among Bank of America, Intersections, and the telemarketing firm that made the first call," and a small amount goes toward an insurance premium, the complaint states.
Intersections "derived over $236 million in revenues in 2007 and over $361 million in revenues in 2008," which does not include what was paid to AIG or its subsidiary, according to the complaint.
The class claims that the insurance customers get is "almost a joke." The "victims are not even direct beneficiaries of any insurance policy," and the policy is terminable if the customer closes their BofA account, the class claims.
Bank of America's "privacy" policy deceptively states that it does not share customers' confidential information with marketers, but that it will share information with companies that work for Bank of America, in order to better meet customers' needs, according to the complaint.
The entire scheme "is structured so the victims can never figure out what is going on," the complaint states.
Defendants include Bank of America, Bank of America Insurance Services, BA Insurance Services, Intersections, Intersections Insurance Services, Loeb Holding, Global Contact Services, American International Group, and National Union Fire Insurance Company of Pittsburgh.
The class seeks punitive damages for fraud, breach of contract, unjust enrichment and breach of fiduciary duties. Its lead counsel is Kenneth Wynne. "
http://wynne-law.com/contact.php
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1460963
"The Invisible Hand of Preacquired Account Marketing
Prentiss Cox
University of Minnesota Law School
August 24, 2009
Abstract:
Many of the nation’s largest financial institutions sell to direct marketers the right to charge their customers’ financial accounts. Major retailers, including well-known internet merchants, engage in the same practice by allowing direct marketers to charge the credit card or other accounts used by consumers to purchase goods or services from the retailers. This practice is known as preacquired account marketing. It results in millions of consumers paying for services that they did not intend to order and do not use. Preacquired account marketing shifts the control of account charges from the consumer to the seller by circumventing short-hand methods used by consumers to signal assent to an account charge. The central thesis of the Article is that preacquired marketing exists solely because it allows these sellers to sort out vulnerable consumers who pay for a service without their knowledge. Data from public enforcement actions strongly support this thesis. Many consumers whose accounts are charged have diminished mental capacity or struggle with the English language. The Article proposes a uniform law to prohibit preacquired account marketing.
Keywords: preacquired account marketing, post-transaction, upsell, Vertrue, Affinion, webloyalty
JEL Classifications: D18
Working Paper Series
Date posted: August 25, 2009 ; Last revised: August 25, 2009
..."
Interesting observation that "bank marketing partner" preacquired marketing fraud is part of the same fraud nexus as "membership club" preacquired marketing fraud.
Investigation of both types of complaints has shown crossover with the same telemarketing companies involved in both types of product marketing, with similar types of deceptive telemarketing. Note the companies that come up connected to both "membership" and "bank affiliate" marketing: Vertrue/Memberworks, Trilegiant, both of which reached settlements along side their major bank partners.
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1460963
"The Invisible Hand of Preacquired Account Marketing
Preacquired account marketing is a sales practice that allows companies to charge consumers for services they do not know they ordered and do not use. The practice depends on a seller’s ability to charge a consumer’s financial account without the consumer providing the account number to that seller. This is possible because the seller has paid a financial institution, or another seller who retains consumer account numbers, for the right to charge those accounts.
Almost all of the consumers paying for the services sold through preacquired account marketing are unaware their accounts have been charged and unaware they have “purchased” the service.1 Many of these consumers are charged because they have diminished mental capacity or struggle with the English language.2 Preacquired account marketing works only because it allows the sorting out of vulnerable consumers who do not understand the solicitation or who do not notice the account charge. Data from public enforcement actions against banks and sellers using preacquired account marketing demonstrate this result occurs in all different formats of preacquired account marketing.3
The number of consumers affected by this questionable practice runs into the tens of millions, which is enough to support numerous sizeable companies.
4 Many of the nation’s largest financial institutions are substantially involved in the practice.5
Part I of this Article details how preacquired account marketing works. This sales method permits sellers to charge consumer accounts used in conjunction with the mass marketing of membership clubs, insurance policies and other services. The issuers of consumer financial accounts, especially financial institutions that offer credit cards and checking accounts, contract with these sellers to allow the sellers to charge their customers’ accounts. Alternatively, the preacquired account seller contracts with another seller who has acquired consumer account numbers by selling goods and services. All forms of direct marketing are used for these ventures, including direct mail, various internet marketing channels and telephone solicitation.
Part II explores how this form of marketing causes consumer deception. Preacquired account marketing flips the power dynamics in the solicitation process by shifting the burden to the consumer to stop the seller from accessing her account, rather than forcing the seller to obtain from the consumer the keys to charging her account. Consumers normally provide their account numbers only after becoming assured that they understand the transaction. Preacquired account marketing bypasses this gate keeping by the consumer. This Part catalogs the overwhelming evidence that preacquired account marketing results in charges to millions of consumers who do not know their accounts have been charged. The likelihood of deception is more severe when the consumer has reduced cognitive function due to disability, age or illness, or when the consumer is
1 See infra notes 85-129 and accompanying text.
2 See infra notes 75-76 and accompanying text.
3 See infra notes 85-129 and accompanying text.
4 See infra notes 28-29 and accompanying text.
5 See infra notes 23-27 and notes 107-113 and accompanying text.
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trying to negotiate the solicitation with limited English language skills. The central thesis of this Part is that preacquired marketing is profitable for the seller and its partners because it selects for vulnerable and deceived consumers who pay for a service without their knowledge.
Part III briefly examines two efforts by the federal government to restrict preacquired account marketing. The first action was part of the privacy protections enacted in the 1999 deregulation of the financial services industry in the Gramm Leach Bliley Act.6 A seeming total ban on preacquired account marketing in that Act was turned into a sanction of the practice by regulations promulgated by federal agencies to implement the Act.7 A more successful, but very limited, regulation was promulgated by the Federal Trade Commission in its 2002 amendments to the Telemarketing Sales Rule.8 This Part also briefly looks at the limits on market-based or litigation responses to the problem.
Part IV proposes the adoption of a Uniform Consumer Account Control Act (“UCACA”).9 A total ban on preacquired account marketing is the appropriate remedy for the deception perpetrated on the millions of consumers whose accounts are deceptively charged through preacquired account marketing. The UCACA differentiates between preacquired account marketing, where the seller did not obtain the account access information from the consumer, from seller-retained account information, where a seller obtains account information from a consumer and then uses that information in a later solicitation of the same consumer. The UCACA includes limits on the use of seller-retained account information with trial offers.
Part IV also explains the rationale for completely forbidding the use of preacquired account marketing. Prohibiting this form of marketing is conceptually less difficult than many other areas of consumer protection regulation because the ratio of regulatory costs and public benefit is so lopsided. The regulatory costs in this situation are almost non-existent. There is no discernible benefit to allowing a seller access to consumer accounts without the consumers providing their account access information. Any seller can avoid having to comply with the regulation simply by directly acquiring the consumer’s account access information, a task all other types of sellers must accomplish. The real burden of this last step, of course, is that the seller must have actually reached an understanding with the consumer that the consumer wants to pay for the merchandise.
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Premise is that federal regulators, particularly OCC, have been ineffective at enforcing consumer protection laws against major national banks. In particular, they have failed to stop predatory or fraudulent preacquired account marketing.
http://www.responsiblelending.org/mortgage-le ... 10-09-final.pdf
"• Weak response to bank that aided telemarketing
Ignoring abusive preacquired account marketing programs. Numerous national banks have taken part in abusive “preacquired account marketing programs,” in which banks provide third-parties, such as telemarketers, with personal information about credit card or mortgage account holders and their accounts to use in targeted marketing for usually low-value, high-margin add-on products. In addition, such programs potentially leave account holders vulnerable to unauthorized withdrawals from their accounts by unscrupulous vendors. State attorneys general have pursued these unfair and deceptive practices vigorously against all the participants in these schemes, including major OCC-regulated national banks Chase, Citi, and First USA-Bank One.26 The OCC, by contrast, not only failed to uncover such abuses in its supervision of these entities, but affirmatively went to court in 2001 to try to prevent states from protecting consumers against such abuses by national banks.27
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http://www.abanet.org/publiced/preview/briefs ... tectionOrgs.pdf