U.S. Bank fined $37.5M for creating unauthorized accounts for sales goals

The Consumer Financial Protection Bureau on Thursday fined U.S. Bancorp $37.5 million for aggressive sales tactics in the early 2010s, including opening credit cards and other accounts on customers who had not requested them.

The government's consumer watchdog on banks said that the Minneapolis-based company, which runs U.S. Bank, violated three federal laws by opening accounts that "likely caused substantial injury" to customers from fees and damaged credit.

In addition to the fine, the agency said U.S. Bank must develop a plan to return all the fees and costs with interest.

The aggressive sales practices ended in 2016, the agency said, and involved a "small percentage" of new accounts at U.S. Bank. Neither the agency nor the company said precisely how many accounts were involved.

In a statement, U.S. Bancorp said the agency has been investigating the sales tactics for about five years and that it was "pleased to put this matter behind us."

"Since 2016, the bank has made process and oversight improvements that have been effective in addressing these sales practices concerns," the company said.

The practices were similar in some respects to those at other banks in that period. In the 1990s and 2000s, incentives grew for bank employees to cross-sell, or sell multiple products at once.

Most notably, Wells Fargo was found to have created more than 1.5 million unauthorized deposit accounts and more than 500,000 credit cards from 2011 to 2016. The company was eventually fined hundreds of millions of dollars.

U.S. Bank in 2016 began to require that customers sign documents that acknowledge they are asking for a new account, credit card or other product. The firm also changed its financial incentives to employees, delaying commissions or other payments until a customer used a new account or product.

In the consent order released Thursday, the Consumer Financial Protection Bureau acknowledged that the changes U.S. Bank made in 2016 worked. It said the number of accounts that appeared to be unauthorized "trended downward after these process improvements."