Someone from This Billion-Dollar Fraud Machine Needs To Go To Jail

41 | By Shah Gilani

Something happened yesterday that is eye-opening, on several levels.

The Consumer Financial Protection Bureau (CFPB) and the Office of Comptroller of the Currency (OCC) slammed one of the nation’s biggest banks.

It turns out this bank, like several other financial giants, is a fraud machine.

Plop, plop, fizz, fizz (that’s me dropping my Alka-Seltzer) oh, what a surprise it is…

Only this latest scheme could have taken money directly from your pocket… and someone needs to be locked up.

Why Aren’t These Fraudsters Going To Jail?

I’m talking about Bank of America (BofA).

The CFPB looked back as far as 2001 into BofA’s marketing and sales of “add-on” products.

And it wasn’t a surprise to the CFPB (I’ll get to why it wasn’t in a minute) that Bank of America had ripped off their beloved credit card customers by selling them stuff like identity theft protection and credit protection programs, without ever actually providing much of anything.

I’m not going to talk about the OCC’s part in this because the OCC has only lately been flexing its puny muscles and was in LaLa Land before, during, and after the financial crisis, and is a useless regulator, really just playing tag-along on the shoulders of the CFPB. Oh wait, I just did talk about them.

Anyway, CFPB Director Richard Cordray, a really great – make that a bloody amazing – crusading white-knight regulator said in a call with reporters, “We will continue to be vigilant in pursuit of anyone who deceives or mistreats consumers.”

Deborah Morris, the CFPB’s deputy enforcement director, estimated about 1.5 million consumers paid at least $459 million just for identity protection products.

The joint-agency enforcement action also alleges the bank used deceptive marketing tactics when selling a payment protection product meant to cancel the customer’s debt if they experienced an involuntary hardship.

“For example, one (telemarketer) script we reviewed stated that with ‘Credit Protection Plus,’ Bank of America would cancel up to 18 months of the consumer’s minimum balance if the consumer was admitted to the hospital for as little as one night,” Cordray said. “In reality, a single night’s hospital stay would only entitle consumers, who successfully navigated Bank of America’s claims process, to one month of benefits – not the 18 months claimed in the scripts.”

All in all, the shady marketing and billing business – heck, let’s call the outright fraud the bank screwed its customers with – resulted in a consent order making them pony up $727 million (BofA calculates it at $738 million) in customer restitution and $45 million in fines and penalties.

Restitution is great, but a $45 million penalty? For fraud?

Seriously, if anyone else but a big bank, a big protected bank, had committed this kind of fraud, someone would be going to jail.

What drives me to my Alka-Seltzer and other relief concoctions is the headache and heartache I get when no one who is responsible for these fraud schemes goes to jail.

It’s a bank; there are lines of authority, of management, of orders and an order trail. Who planned on not delivering the services? Who said we’ll just take their money? Someone, really several people, had to plan this. Offering services that aren’t delivered just doesn’t “happen” by itself.

Okay, that’s a long discussion. But we both know the Too Big to Fail banks are criminal enterprises – protected criminal enterprises.

More Fraudsters Coming Right Up

Bank of America wasn’t the only player of this game of frauds.

The CFPB’s Cordray says, “Through five enforcement actions the Bureau has taken to date on credit card add-on products, we have now put nearly $1.5 billion back into consumers’ pockets. We intend to continue cleaning up this market as necessary to ensure that consumers are treated fairly.”

They’ve been looking at add-on products since the agency’s inception three years ago. Their first enforcement action came in July 2012 against Capital One Financial Corp. for using vendors who aggressively marketed and sold   similar add-on products. Next, Discover reached a $214 million settlement over allegations that it improperly marketed payment protection and identity theft services to credit card customers.

American Express paid a $76 million settlement in December based on allegations of deceptive marketing and unfair billing practices selling credit card add-on products to its customers.

American Express in late 2012 was charged $112 million in fines and refunds on allegations that it violated debt-collection practice laws, discriminated against new customers based on age, and failed to report consumer disputes to the credit bureaus.

According to an American Banker article today, “Most of these companies have since either stopped offering or changed their credit card add-on products. But that has not slowed down the agency.”

“We’re going to continue to look at these problems as we become aware of them and determine in each case what action is appropriate,” said Morris, the CFPB’s deputy enforcement director.

Now, if they can just build a big enough jail…

41 Responses to Someone from This Billion-Dollar Fraud Machine Needs To Go To Jail


    I am not a fan of the Obama admin. I do however give them Kudos for smacking these Financial Behemoths with big fines! I share your assertion that they need to start passing out some jail time!
    Only then will this stop! They now pay the fines with Other Peoples Money! perhaps we can someday start kicking the Banks and the fed in the Ass!

  2. Andrew Herrera says:

    Thank you for the insight. Simply the tip of the iceberg. Throw in the billions made by oil companies with their unethical “inflation” of gasoline prices and you’ve just begun to scratch the surface of how big a problem this “greed” really is.

  3. June says:

    I LOVE your post Shah (if I may call you by your first name). You tell it like it is and I respect the truth highly these days. Please keep feeding us your great up to date current events.

  4. Phil Young says:

    My company, CheckWare Systems, Inc. sells check cashing systems to MSB/AML Compliant retailers. These folks are constantly bad mouthed by the press and sneered at by Officials of the US Government and their minions of agencies.

    I have never seen one of our customers have the disrespect to their users of services as the too bigs display to theirs. I think that using a too big is proof of the saying “fool me once shame on you…Fool me 2wice, same on me.

    As long as the “easing” continues they really don’t need retail customers. On that basis, why should they care if they burn a customer up. As long as they are protected by the Federal Government, they will continue to run scams and say “oh well” when they get caught.

  5. Spartacusstoo says:

    All of this is enough to bring on some serious barf. And it isn’t just BofA either. The whole gaggle of investment banks especially are up to every shenanigan they can especially in this time frame as with interest rates near zero, they are forced to look at other venues of income to get by and so no wonder all this shady crap. My last reading was on the practices that caused the melt down in ’07 are going on all over again and the result will be yet another meltdown, but no bailouts this time as the FED is broke I am led to believe.

    And “go to jail?” surely you must be kidding. For that matter more than fifty percent of the jokers in congress should be in jail right along with the mighty and not righty Obama.

  6. Reece Hawkins says:

    Shah, what a jail that would BE! They’d have to use all the fine money, and then some!!!! And they obviously aren’t through yet!

  7. BERNARD NARCY says:

    I don’t think there is a jail big enough. The one thing you didn’t explain is why no one goes to jail? The proof is in the pudding and there lay the pudding.
    It’s a lot of times when you don’t really go far enough in your articles. I love ’em, don’t get me wrong, i just think you come up short some time. Best.

  8. Albert R. Campbell says:

    These too big to fail banks would die of anemia if consumers especially, would utilize their local banks. That’s where the profit is, fees and service charges. Is there a vital service BofA or any of the other huge banks provide that much smaller neighborhood banks can’t provide? I’m not a financial expert, I’m just thrifty Scotsman. But I can see where my business is needed and appreciated. I also realize that my account in a local bank makes a bigger impact ( A louder voice) on their business than Bank of America.

  9. Myron says:

    Perhaps future fraudsters with a well funded legal team, like Bernie Madoff knockoffs, can use these proceedings as precedence and avoid hard time.

  10. H. Craig Bradley says:


    Clearly, any customer of a U.S. BANK is a easy mark who will buy most any bank product or service offered. Have you noticed how many banks and other businesses ( local coffee cafe) always up-sell with each customer order or call ? Its a very common and broad-based business practice today. It used to be in the 1990’s that certain catalog telephone customer service dept. such as Eddie Bauer practiced it around the Christmas Holiday Season. Telephone representatives would get a kudo or reward for so many up-sells on their shift or per week. Now, everyone is doing it.

    People should limit their purchases to what they need and what is on their shopping list before they do any transaction in person or on the phone. I tell the order taker on the phone to move-on and complete my order as stated, or I will abort. They are very stubborn and ignore. Obviously, retailers hire corporate robots or zombies.

  11. S Erickson says:

    Where is the money going? I haven’t seen any of it. Is it going back to the consumers? Thanks for all you do.

  12. margaret cleaves says:

    CFPB is a great service. More individuals should avail their service. I had a
    long running problem with GE Capital. GE Capital had ignored all my requests
    for an investigation or correction of their mistake until CFPB called them. In
    less than a week I was getting service.

  13. robert w. says:

    If you could print some of the names, perhaps you could shame some of the lesser crooks into changing their ways.
    I know you have published the names of some of the biggest crooks but they are already beyond shame.
    When a billionaire goes to jail, I will believe in justice.

  14. JAY B JACOBI says:

    What about the life threatening mafia that shoots 747’s out of the air, kills presidents, leaders, runs the media and undermines the entire governments/banks of several major countries.

  15. Zachary says:

    You failed to mention the mother of all frauds, the naked short selling of precious metals contracts to control the price. No one sells 650 million dollars worth of gold in 3 minutes unless they intend to drive the price down to trigger other investors sell stops, then buy it back at a cheaper price before they can react. You should ask Blythe and Jamie how the precious metals manipulation business is going. That would be a real story.

  16. Zachary says:

    Just for the record, I am talking about Blythe Jefferson and Jamie Cummings at JT Marvin Chace Bank, not the other one are thinking about. Wouldn’t want a libel lawsuit on my hands…….

  17. Karen says:

    Really appreciate your articles.
    I’ll join you with the Alka-Seltzer.
    When it comes to money, fraud starts at in the legislaters pocket.

  18. Kosovokid says:

    It is amazing how the guilty at these banks took outsize bonuses when these fraudulent payments were made, but only the banks repaid the customers or made any penalties. Why would any bank personnel fail to take on a risk when little to nothing happens to them personally? The actions by the government agency, while commendable, really allows criminals to keep there plunder whi, e not going to jail. This continues to make the government secondarily liable to the fleecing of the taxpayers, first by the criminals and second by the government which benefits by all of these penalties paid.

  19. GOELEVEN says:

    How it is possible that 95 % of the Stocks,have decreasing on one day?

    Fraude over the World??

    Regards / Serge from BELGIUM

  20. Money May says:

    I find this quite interesting. I am a former banker of Wells Fargo and it was a part of our compensation package to push identity theft and other add-ons to customers. I often didn’t see the use of them but it was frowned upon when you didn’t make your quarterly add-on goal. What I find interesting is the fact that these add-ons weren’t actually performing the stated service for the customer. How sad.

  21. francis brown says:

    Yes, but what about the rest of them? Wells Fargo is pretty good at hanky-panky and they are still riding on their lies by telling more. And then there is Citi and on and on. gb

  22. james Griffith says:

    Great! The government collected over a billion and put it in their pocket. How does that reimburse the consumers who were ripped off. The fraud is just as great on the part of the Obama Administration as is that of the banks.

  23. James says:

    If corporations are people, then they should be treated as people under the law. Certainly, someone should be going to jail. At the minimum, the person who approved the fraud, if not the CEO, and the CEO for allowing the fraud to execute.

    • SAM c says:

      Wouldn’t it be sooo appropriate that for every corporation there would be a named heirarchy of management that would be held responsible for misrepresentations or outright fraud. These individuals would be required to answer for illegal corporate operations either by tremendous fines or jail time… longer would it be possible to “hide in the numbers”. These guys know exactly what they are doing and need to be held responsible for their actions…or is denying responsiblity now in vogue at all levels of humanity ??

  24. Myron Martin says:

    Indeed white collar crime has become endemic and fines no matter how high are really just a license to continue stealing from a long suffering public.

    While our Canadian banks are rated as the “worlds best” and have not been as blatant with their ripoffs as their U.S. counterparts, the fact remains that they have more then enough skeletons in their closet as well.

    It has become routine for credit card issuers to keep raising credit card limits as long as the customer keeps paying at least the minimum payment on time. Then at some point banks are surprised when customers run into trouble and are unable to keep up payments. I think somebody with the means should start a class action lawsuit against all banks and credit card issuers who have used “teaser rates” to in effect “lure people into DEBT.

    They do not issue credit as advertised, in my opinion loans obtained by “teaser rate” offers should be considered FRAUD and declared uncollectable.

    • Celeste Ferenczi says:

      I agree with you about the “teaser” rates credit cards.BOA kept sending me these offers. I wasn’t even employed at the time. My husband was working; we were adding on to our house; it was a great incentive- 0% interest, and easier to put them in my name, not to mention that they came to me and not him. But, it ended up way more expensive than I had imagined. They would add late fees when the payment wasn’t late and all other kind of tricks to get extra money from me. I was calling them EVERY month about my bill. Then, my husband was laid off! We ended up having to file bankruptcy. They had just changed the bankruptcy laws, so there really wasn’t any lower payments. We couldn’t afford to finish that program. Now, after all these years, they send a “cancellation of debt” that I have to add on to my income when filing my income tax. They certainly added interest for as long as they could, which added to the amount of debt that they released me from. And they really didn’t contact me very much about the debt.( which made it easier to not pay) What do they get for dismissing my debt from the Federal Gov’t? It must’ve been worth their while! They should be held at least somewhat responsible for constantly sending offers that they know you can’t afford! It’s a crying shame what the gov’t does (or doesn’t do) to let these companies screw over the people!

  25. kevin says:

    Protected Criminal Enterprises, or “Banks too BIg to Fail”
    Bankster-hoodlums set them up, and they should go to jail
    A “Wall of Shame” should be enshrined on “Wall Street”s walk Of Shame
    Where Jamie Dimon and his like could pause to see his name
    With all the other Bankster-Hoods who made the system pay
    When they are found in breach of trust, which happens every day
    at some( or every ) major Bank that now has made the grade
    Let’s prosecute them all, and call a SPADE , a SPADE.

    • SAM c says:

      Are any of you aware that there is a movement within the SEC to absolve wall street traders/brokers of any existing complaint issues regardless of may have occurred? We peasants kneel here with our heads in the sand and find it far more convenient to accept or ignore issues that could affect us……
      Thieives protecting thieives……….
      These wall streeters are paid high salaries and unprecedented bonuses to remain silent and deflect responsibilities from themselves and upper level management…….break the code and you’re gone for sure !!!!

  26. PeterW says:

    This is just another example of our decent into the Dark Ages, as HONOR no longer existing.

    This is due to false religious teachings, that I expect that no one can see, but to me, it is clear as an AZURE sky, not a cloud to be found.

    It is clear to me, as I understand why, and can prove, by simple logic, how we are plagued, by false religious teachings.


  27. Richard says:

    This is one part of the problem, another is from Insurance Companies…. Their practices are just as fraudulent… The ones that work with the Banks in underwriting and stand alone marketing to consumers. Shah…. We need a jail…. a very big one….. Thanks for your efforts and words of truth….

  28. John Starkey says:

    How do I get in contact with these agencies. I believe my wife was duped into buying and accidental death/ injury policy when she opened a savings account.

  29. Farok Ardesher says:

    No one is going to Jail. Who will FEED THE POLITICIANS. It is 2014
    and November is just around the corner.

  30. Rick says:

    Shah, Once again spot on target with the truth.
    Sadly the other part of the truth is they will never go to jail
    but it will work like this.
    Perp A goes to work where perp F was screwing the customers.
    Perp B goes to work where perp D was doing the same.
    Perp D goes where A was, C goes to F, F gets hired by
    the CFPB as an ananlyst making twice the salary, etc.
    Holy #%*^ where does it end?
    Oh yeah, it doesn’t end.
    Just do the TBTF shuffle and leave us with our heads spinning
    trying to keep track of who did what, when, where,
    No accountability is the name of the game.

    The fines you mentioned are like the average citizen paying a
    10 cent penalty over a period of many years.
    The banks are laughing at us all and don’t care if
    we all know what they have done because the lawmakers have their
    backs all the way to next fleecing of the public.

    Sorry about the gloomy side of it but seems to be the truth.

  31. Patrick Hickey says:

    The U.S. has lost its moorings to equal justice in the eyes of the law, obviously. Here in Sedona, Arizona, just about every week, people are sent to jail for failing to pay a traffic fine, while the to big to fail real criminals on Wall Street don’t have to even pay fines out of their own pockets.

    Last year, the NYT reported that in various states, people at the bottom of the economic heap have actually become a financial resource to support local courts and jails.

    If one of the local advantaged class gets a summons, they simply pay it, and that is that. If someone of limited means gets the exact same charge and fine, they are criminalized and may end up in jail complete with a record.

    The local newspaper will not even allow any commentary on this topic, because the chamber of commerce will not tolerate it! So much for freedom of speech.

    Fortunately, I’m retired, but if I needed a job to get by, I’d be blacklisted by local employers for speaking out. As I already am blacklisted by the local newspaper. This is frustrating, but “life goes on” for me, at least, even though like I said, others do not enjoy equal rights as they well deserve as American citizens!

  32. George Holloway says:

    Far be it for me to try to excuse Bank of America for fraudulent practices but, to be fair, the claim did say “. . .up to eighteen months. . .” This, of course, means that eighteen months is the maximum length of protection–not the usual.

  33. Jeffery Reed Thomas says:

    Good article Shah, it never ceases to amaze me at what the Banksters can get away with the silent permission of the lowlifes in government.

  34. Ken says:

    The Mafia and Cosa Nostra are all either dead or in jail. Know why? The Federal Government
    doesn’t like competition. They want all of the corruption to themselves. And look at the state
    lotteries. I have read that their payout ratio is less than organized crime’s “numbers racket” was.
    Remember Harry Brown’s comparison of organized crime and government? The only thing that
    has changed, in those 40-odd years since his book was published, is that the corruption has become a lot worse.
    You can’t trust the politicians when they are all getting rich on the corruption.
    The only thing to do is to find out where the corrupt businesses are and boycott them. That’s what
    I do.
    The only thing the government can do is to try to sabotage the gold and silver markets so that they can
    continues their scams. Eventually however, their game will collapse, and we will have to suffer through 200 years or more while a new, more honest civilization is constructed on the ruins of what we have now. It’s a shame, but no one has the cojones to do what needs to be done to set everything right.

    If I can finish my book and get it published, I will provide many more details to bolster my argument.
    My conclusions are inescapable to the rational mind.

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