Santander hit with $6M fine for bad billing practices

SANTANDER BANK has agreed to pay a $6 million fine to the U.S. Comptroller of the Currency for what the regulator says were violations of the Federal Trade Commission Act regarding the bank's billing practices for an identity protection product, Sovereign Identity Protector.
SANTANDER BANK has agreed to pay a $6 million fine to the U.S. Comptroller of the Currency for what the regulator says were violations of the Federal Trade Commission Act regarding the bank's billing practices for an identity protection product, Sovereign Identity Protector.

BOSTON – The U.S. Comptroller of the Currency has fined Santander Bank NA $6 million for violating the Federal Trade Commission Act as it relates to the bank’s billing practices of an identity protection product.
Without having to admit or deny any wrongdoing, Santander agreed to pay the fine, which comes on top of $37.6 million it already has paid out in refunds to customers who paid for – but may not have received – services from the product, according to the bank.
“The bank has revised its internal procedures relating to external vendors who offer add-on consumer products,” Santander said in a statement.
Between January 2010 and July 2013, Santander and its vendor sold an identity protection product called Sovereign Identity Protector to its customer. The product included “credit monitoring and credit report retrieval services,” according to a consent order from the Office of the Comptroller of the Currency.
But not everyone got what they paid for, according to the order.
“From January 2010 to August 2014, the bank billed Sovereign Identity Protector customers for the full fee of the product even though not all customers were receiving the credit monitoring and/or credit report retrieval services of the product,” according to the order.
The comptroller says the bank also billed customers multiple times without them receiving additional features or benefits and that the bank kept a portion of the fees paid from customers not receiving the services.
“The bank’s violation of Section 5 of the FTC Act caused substantial consumer injury or was likely to cause substantial consumer injury,” according to the order. “The bank’s violation … is part of a pattern of misconduct that resulted in financial gain to the bank.”
The bank’s board of directors agreed to pay the fine, a civil money penalty, upon the execution of the order, which was agreed to on March 20.
Santander, a subsidiary of Spain-based Banco Santander SA, is Massachusetts’ third-largest retail bank by deposits, according to the Boston Business Journal, and its main corporate offices are in Boston. Formerly known as Sovereign Bank, it became a part of the Santander Group in 2009. It is also the third-largest bank by deposit share in Rhode Island, according to Providence Business News’ 2015 PBN Book of Lists.
Banco Santander’s U.S. units have struggled as of late, as Santander Holdings USA – the bank’s holding company – was just one of two out of 31 financial institutions to fail the Federal Reserve’s so-called “stress test” last month. The Fed found weaknesses in the bank’s internal controls, failing it for the second year in a row.

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