Bank of America was ordered to pay $250 million in fines and customer compensation this week, after the Consumer Financial Protection Bureau found that the bank violated several consumer protection laws. According to the CFPB, the bank double-charged insufficient fund fees, withheld credit card rewards and welcome bonuses, and opened new credit card accounts without customer consent.
This is troubling behavior by a trusted financial institution and the second-largest bank in the country -- and it’s not the first time it’s been penalized for shady activity. The bank was fined $727 million in 2014 for illegal credit card practices.
The CFPB found that bank employees used consumers’ personal information to enroll in fake credit card accounts in order to meet sales goals. “When a bank opens an account in your name, that’s identity theft,” said Beverly Harzog, a credit card expert and consumer finance analyst at U.S. News & World Report.
Actions like these result in unjust costs to accountholders and can inflict long-term harm to credit profiles. While it’s difficult to completely prevent fraud from happening, you can take measures to monitor and catch suspicious activity, stopping bad actors before too much damage is done. The first step is to use a credit monitoring tool. Here’s what to know.
Credit monitoring tools
Reviewing your credit report is critical to managing your finances. Credit reports show credit usage, payment activity and actions taken based on those accounts. You should be able to notice what is familiar activity and what is potentially fraudulent.
Anyone can access a free weekly report by going to AnnualCreditReport.com through Dec. 31, 2023, and requesting access from the three major credit bureaus, TransUnion, Equifax and Experian. Otherwise, you can check your credit reports once per year.
Several major credit card issuers, including Capital One, Chase, American Express and Discover, also offer customers services that track your credit reports with one or all of the major credit bureaus. These tools can alert you when there’s new activity on your credit report, such as a new credit inquiry, or when a credit card or loan account is set up in your name.
“These are valuable, free tools to help you manage your credit and to protect against fraud. It’s a good idea to use at least one of them,” Jason Steele, director of credit card content for Money.com, told CNET.
Capital One
Capital One’s CreditWise is a free service that will let you check your VantageScore credit score from TransUnion and also monitor the dark web for your personal information such as your address, email or Social Security number.
CreditWise will also alert you when there’s a new inquiry, i.e., when a new credit account is requested, on your TransUnion or Experian credit report. This tool is available for everyone regardless of if you have a Capital One credit card or not. You can also get assistance if your identity is stolen.
Chase
Chase’s Credit Journey is also free and works similarly to CreditWise. It’ll let you monitor your VantageScore credit score as well as keep an eye on the dark web for your Social Security number or email. You can also receive alerts of new inquiries on your Experian credit report. You don’t need to have a Chase credit card to take advantage of the service, either.
American Express
American Express offers the CreditSecure program. Unlike Capital One and Chase, this isn’t a free tool -- you’ll pay $1 for your first 30 days and then $16.99 billed monthly thereafter. CreditSecure offers FICO score credit monitoring as well as access to all three of your credit reports from the major credit bureaus. It’ll monitor your credit reports for new inquiries, as well.
CreditSecure will also provide alerts when your personal information is compromised or found on the dark web for you and up to five children. You’ll also have access to fraud assistance agents if you suspect fraud or your personal information is compromised. You’ll need either an Amex credit card account or savings account to access the service.
Discover
Discover’s program is called Identity Theft Protection. It costs $15 a month and provides alerts for activity reported to all three major credit bureaus. It also provides bank account alerts, Social Security number alerts, dark web alerts and credit utilization alerts. You can also add up to 10 children for no additional cost. You’ll need a Discover credit card, bank account, student loan or loan account to access it.
What to do if you don’t recognize a new inquiry on your credit report
If you don’t recognize a new inquiry on your credit report, you should contact the issuer, inform them of fraud and close your account, according to Steele. “You may also wish to put a freeze on your credit reports, which prevents an account from being opened in your name,” he said.
Freezing your credit reports with Experian, TransUnion and Equifax not only stops new accounts from being opened in your name -- it will also prevent others, including lenders, from accessing your credit reports.
Next, you can freeze your credit cards from your online account to bar them from being used. You should then file a dispute with the credit bureaus contesting the credit inquiry.
You can also report identity theft to the Federal Trade Commission. The FTC will recommend an identity recovery plan and provide an identity theft report that you can send to the credit bureaus when you request to remove an inquiry.
If there’s a new hard inquiry on your credit report, which typically indicates a new credit account application, you’ll have to work with the credit bureau as well as the lender. In most cases, if it’s an instance of fraudulent activity, it can be removed. According to Experian, if you can’t prove fraud, the hard inquiry will likely fall off after two years.
The bottom line
Bank of America’s illegal activity shows that fraud can happen anywhere, even with the very financial institution we trust to protect us against scams.
The best course of action is to take advantage of credit monitoring tools that can help protect you against fraudulent accounts, or to sign up for identity theft protection services that are independent of credit card issuers.
Otherwise, regularly checking your credit reports from all three credit bureaus -- which you can access for free via AnnualCreditReport.com -- is a good way to promptly catch and deal with fraudulent activity. “You should check your credit reports regularly, at least once a year,” Steele said.
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