6 Signs You’re Being Sold Illegal Credit Card Add-On Products

If your bank or credit card provider has ever tried to sell you “payment protection” or a product to monitor your card for identity theft, then you’re being sold some credit card add-on products you probably don’t need.

These and other credit monitoring and debt-cancellation products are optional add-ons that consumers are charged a monthly or annual fee for. They may be sold by the bank or a third-party vendor authorized by the bank, and the high-pressure sales tactics can be confusing.

But these additional products and services don’t have to be bought from the credit card company to activate your card.

$32 million lie

How do you know if you’re being lied to in a deceptive marketing campaign for such add-ons on your credit card? A $32 million penalty in August against First National Bank of Omaha in a consent order with the Consumer Financial Protection Bureau, or CFPB, provides some insight into the bank’s illegal practices, and how consumers can question anyone trying to sell them similar services.

From 2002 until at least 2012, the bank, in Omaha, Neb., offered add-on debt cancellation products with its credit card, including “Secure Credit” and “Payment Protection,” according to the CFPB.

The products were promoted as providing a monthly payment to the cardholder’s account if they had certain hardships such as involuntary unemployment, hospitalization or disability. Cardholders were charged a monthly fee.

The bank also offered credit monitoring products such as “Privacy Guard” and “IdentitySecure” to monitor a cardholder’s credit for potential identity theft or fraud and to provide consumers copies with their credit reports.

The CFPB found that the bank deceptively marketed the debt cancellation add-on products and it found illegal billing for credit monitoring services that consumers didn’t receive.

What should you be aware of when being sold such services? Here are six things to look out for when a bank calls you with an offer to sell you credit card protection:

Disguised sales pitch

The bank forced consumers to listen to their sales pitches about debt cancellation products by implying that they had to stay on the phone while their cards were activating.

In reality, the card activation process was nearly instantaneous and consumers didn’t have to stay on the line and listed to the pitch to have their cards activated. No services have to be bought to activate a credit card.

Distracted into buying

Some people were led to believe they wouldn’t have to pay for the debt cancellation products, the CFPB says.

For example, instead of asking if the consumer wanted the product, the bank confirmed enrollment by asking for the consumer’s city of birth.

In other cases, the bank didn’t make it clear that consumers were making a purchase. Instead, they made it seem like the consumers were receiving a benefit, updating their accounts, or that the consumer was merely agreeing to receive more information about the product.

Ineligibility not disclosed

The bank told some consumers they were eligible for the product even when the consumer had disclosed information suggesting they would be ineligible for some product benefits, such as that they were retired, self-employed or employed for less than 30 hours a week.

Product benefits hindered

The bank had strict eligibility standards and administrative requirements that prevented the vast majority of consumers from obtaining several of the promised debt cancellation benefits, the CFPB found.

For example, the bank wouldn’t cover consumers if they had pre-existing health conditions, but it defined pre-existing as any condition diagnosed or appearing for up to six months after consumers enrolled.

Cancellation difficult

Debt cancellation products were marketed as easy to cancel, but the bank instructed its customer representatives to make cancellation difficult.

It had a sales incentive plan that awarded customer service reps money for a “save,” which happened when they kept a customer enrolled after attempting to cancel. Consumers were often unable to cancel unless they were willing to demand cancellation multiple times in succession.

Billed for services not provided

In many cases, cardholders didn’t receive the credit monitoring services they paid for because the bank didn’t properly process their authorization. In other cases, some credit reporting companies didn’t process the authorizations because they couldn’t match the cardholder’s information to their files.

This bank in Nebraska isn’t the only bank selling credit card add-on products illegally. In 2015 the CFPB enforced such actions for illegal selling methods every month.

Before buying any credit card add-on products, it recommends reviewing the terms, costs and benefits in writing. When asking for written information, make it clear that you don’t want to enroll in anything until you have the written information and decide you want the product.

Also avoid “trial periods” until you read the terms of the trial period in writing. Some trial period terms allow the company to begin automatically charging you for the product at the end of the trial period, unless you call or write the company.