By Jeff Bater
Nov. 28 — The Consumer Financial Protection Bureau warned financial companies about sales incentives that might lead to fraud two months after its crackdown on Wells Fargo.
The agency’s guidance released Nov. 28 outlines steps institutions can and should take to detect, prevent and correct such production incentives so they do not lead to abuse of consumers.
”Tying bonuses and job security to business goals that are unrealistic or not properly monitored can lead to illegal practices like unauthorized account openings and deceptive sales tactics,” CFPB Director Richard Cordray said. “The CFPB is warning companies to make sure that their incentives operate to reward quality customer service, not fraud and abuse.”
The bulletin warns firms that unchecked incentives may result in violations of consumer financial law. It listed examples of problems, including the opening of accounts without consent.
In September, the CFPB, the city of Los Angeles, and the Office of the Comptroller of the Currency fined Wells Fargo over allegations its employees secretly opened unauthorized accounts to hit sales tactics. Outrage over the scandal led to the resignation of the bank’s CEO, John Stumpf.
Other examples of incentive problems include misrepresentation of a product’s benefits and the steering of customers toward less-favorable terms.
“Despite their potential benefits, incentive programs can pose risks to consumers, especially when they create an unrealistic culture of high-pressure targets,” the bulletin said. “When such programs are not carefully and properly implemented and monitored, they may create incentives for employees or service providers to pursue overly aggressive marketing, sales, servicing, or collections tactics.”
To contact the reporter on this story: Jeff Bater in Washington at email@example.com
To contact the editor responsible for this story: Michael Ferullo at MFerullo@bna.com
Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)