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First Tennessee Bank pays $1M UDAP penalty for marketing add-on service

Memphis, TN
02/02/2017
Fine Amount: 
$ 1 million
Penalty Type: 
Issued by: 

First Tennessee Bank, N.A., of Memphis, has been issued a consent order by the OCC directing that the bank pay a civil money penalty of $1 million. The OCC identified deficiencies in the Bank’s practices that resulted in a violation of Section 5 of the Federal Trade Commission Act (“FTC Act”), 15 U.S.C. § 45(a)(1), related to billing practices with regard to an identity protection product. The OCC found that:

  • From 2000 to 2006, the Bank and an Identity Protection Product Vendor, on behalf of the Bank, marketed and sold PrivacyGuard, an identity protection product, to Bank customers. The PrivacyGuard product included credit monitoring and credit report retrieval services, among others.
  • The Bank customers who enrolled in the PrivacyGuard product were required to provide sufficient personal verification information and consent before their credit monitoring services could begin and their credit bureau reports could be accessed. Customers could not receive the credit monitoring and/or credit report retrieval services of the PrivacyGuard product in which they were enrolled until the information and consent were submitted.
  • From 2000 to August 2013, the Identity Protection Product Vendor, on behalf of the Bank, billed PrivacyGuard 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.
  • From 2000 to August 2013, the Bank retained a portion of the fees paid by the PrivacyGuard customers, including fees paid by the customers who were not receiving the credit monitoring and/or credit report retrieval services.
  • By reason of the billing practices for the PrivacyGuard product, which were the result of deficient vendor management practices, the Bank engaged in unfair practices in violation of Section 5 of the FTC Act, 15 U.S.C. § 45(a)(1).
  • The Bank’s violation of Section 5 of the FTC Act caused substantial consumer injury or was likely to cause substantial consumer injury.

First Tennessee Bank, N.A., agreed in February 2016 to pay out $1.9 million to settle HUD allegations that the bank illegally discriminating against protected minorities in its mortgage lending.

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