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May 15, 2014 - Image 30

Resource type:
The Detroit Jewish News, 2014-05-15

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Let's talk about it.

Caught Red-Handed


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May 15 • 2014

ast month, the Consumer
Financial Protection Bureau
(CFPB) compelled Bank of
America to refund $727 million for
fraudulently charging its customers for
add-on products, such as identity theft
protection and payment protection
programs and imposed $45 million in
civil penalties.
"Bank of America both deceived
consumers and unfairly
billed consumers for ser-
vices not performed:' said
CFPB Director Richard
Bank of America is not
alone in fleecing its custom-
ers. Created in 2010, the
CFPB was part of the Dodd-
Frank Wall Street Reform
and Consumer Protection
Act. Since Sept. 24, 2012,
the CFPB has compelled
Discover, Capital One,
Chase, GE Capital, American Express
and Bank of America to refund $1.554
billion to customers for similar fraudu-
lent practices. It has been 600 days
since Sept. 24, 2012 — $1.554 billion
divided by 600 = $2,598,662 per day!
Can you imagine if the CFPB was
formed in 2000, rather than 2010? At
the present rate, over the 4,265 days
(365 x 10 = 3,665 + 600) the aggregate
refunds and penalties would equal
$11,083,293,430. That's a whole lot
of fraud — more than even Bernie
If you or I committed these types
of blatant misdeeds, there is no doubt
we'd end up in jail — and deservedly
so. So, how is it that up until 2012, big
banks were able to fleece their custom-
ers at will — and even now, when they
are caught red-handed, all they have to
do is refund the fraudulently received
money and then pay a relatively innoc-
uous fine?
Crime does pay. Of the $1.554 bil-
lion in refunds, the banks were only
penalized by fines of $121 million.
Over the 600 days of the agency's
existence, this means the credit card
companies have been fined at the

rate of $201,166 per day. The credit
card companies charge cardholders
interest at an industry average of 15
percent. Assuming they had the ben-
efit of using the $1.554 billion for two
years before paying the refunds, the
15 percent interest charged to their
customers over the two years equaled
$501 million. If you then subtract the
penalties, the net gain on the money
refunded is $380 million.
Not a bad deal — for the
Even when they are
caught red-handed, they
make money on the deal
because the penalties don't
approach the profit earned
on the use of the wrong-
fully obtained money.
This behavior must be
stopped. We do not raise
our children to be thieves,
and we have the absolute
right to demand the same from our
banking institutions. In the words of
Peter Finch in Network (1976): "I'm
mad as hell and not I'm not going to
take it anymore:'
On occasion, I get into a debate with
someone who thinks it is inappropri-
ate when we are able to represent a
client and resolve credit card debt for
pennies on the dollar. As a child, I
was taught, "Two wrongs don't make
a right:' That's a nice notion and has
many proper applications. That rule,
however, conflicts with other rules,
such as, "an eye for an eye" or as I was
taught in law school, "Don't get mad;
get even:' Since when do we allow
thieves to simply return the money
and pay a small fine?
I'm comfortable with "Don't get
mad, get even" as a practicing lawyer,
and when it comes to the credit card
industry, we should all get mad and

Ken Gross is an attorney with Thav Gross

and host of The Financial Crisis Talk

Center show that airs weekly at 9 a.m.

Saturdays on WDFN 1130 AM, "The Fan"

and 11 a.m. Sundays on MyTV20.

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