My parents told me when I was growing up not to call people liars because it is often an accusation without adequate proof. When I was a rookie credit union auditor, the senior partners and managers at the CPA firm for which I worked stressed not to use the word “fraud” because it was too harsh and may accuse a client without adequate proof. Instead, we had to use terms like possible misrepresentation, impropriety, malfeasance, circumvention, overstatement, understatement, and fabrication, just to name a few. I’ve spent much of my life wondering, “When is someone really a liar or committing a fraud?”
Most of the largest banks in this country have been fined in the hundreds of millions, even in the billions, of dollars for violating a federal law that originated from the Great Recession called UDAAP, which stands for the Unfair Deceptive and Abusive Practices Act. It sounds pretty menacing, and it is by design. The law gives bank and credit union regulators wide latitude to punish financial institutions for deceptive marketing, charging for products that don’t work, and not allowing consumers to cancel the transaction.
The two most common products under federal scrutiny currently are identity theft protection and credit report monitoring. Both products generally cost anywhere between $7 and $13 per month and promises to monitor consumers’ credit reports for signs of fraud. However, telemarketers did not always make it clear that the $1 monthly trial period would have to be cancelled to avoid future charges. The banks do not actually perform these services and contract with a third-party company. Regulators found the banks were not monitoring these companies adequately to ensure customers were getting the services they purchased.
Other so-called “credit card add-on” products include protection programs that cover payments if a person loses a job or is seriously injured. These particular items sound like insurance but are not marketed as insurance to avoid oversight from the state Insurance Commissioner. Sounds like another form of deception.