First National Bank of Omaha to Pay $35 Million Over Credit-Card Practices

WASHINGTON—First National Bank of Omaha will pay more than $35 million to settle claims by two regulators that it deceived credit-card customers into paying for add-on services, some of which they never received.

The Consumer Financial Protection Bureau said Thursday that it ordered the bank to provide $27.75 million in relief to roughly 257,000 consumers and pay a $4.5 million penalty.

Separately, the Office of the Comptroller of the Currency, coordinating with the CFPB, ordered the bank to pay a $3 million fine for the unfair billing practices and compensate certain customers.

The CFPB said the bank disguised the fact that it was selling customers add-on products, such as a debt-cancellation option in the event of hardship and a credit-monitoring program, and made it hard to cancel the extras. In many cases, the services weren't rendered, according to the regulator.

The bank has $18 billion in assets, is based in Omaha, Neb., and is a unit of First National of Nebraska Inc.. It didn't admit or deny wrongdoing.

First National Bank of Omaha's president, Daniel K. O'Neill, apologized Thursday in a written statement. He said some of the add-on products were offered through a third-party vendor, and noted that the bank ended the relationship in 2012 when it became aware of problems. The bank also stopped marketing the products the same year.

"While the bank did not intentionally mislead our customers, our oversight of the products and the vendor that administered these products was lacking," Mr. O'Neill said. "To put it into familiar terms, we did not provide our intended customer experience. For this, we provide our sincere apology."

This is the 12th action the CFPB has taken against a financial company related to such credit-card extras.

"First National Bank of Omaha violated the trust of its customers by illegally signing them up for credit card add-on products," CFPB Director Richard Cordray said Thursday. "The CFPB's track record, and this result today, shows strong and consistent action against credit-card companies that dupe consumers into buying a product they do not want."

Write to Rachel Witkowski at [e-mail]

(END) Dow Jones Newswires

August 25, 2016 15:35 ET (19:35 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.