From staff reports WASHINGTON, D.C. – Kickback schemes, lawsuits, fraud and bait-and-switch tactics were all subject to Consumer Financial Protection Bureau (CFPB) scrutiny, according to December press releases.
On Dec. 23, CFPB announced a lawsuit filed against Rocket Homes to stop the company from providing incentives to real estate brokers and agents in exchange for steering homebuyers to Rocket Mortgage LLC for loans. The bureau alleged that “dog bone” awards of $250 gift cards were given to real estate agents who made the most referrals to favored partners, including Rocket Mortgage and Amrock.
Among other issues, CFPB seeks to bring defendants into compliance with the law, consumer redress and the imposition of civil money penalties. The press release said that Rocket Homes pressured real estate brokers and agents not to share valuable information with their clients concerning products not offered by Rocket Mortgage, such as the availability of down payment assistance programs, which could save homebuyers thousands of dollars.
The CFPB is suing Rocket Homes, The Mitchell Group and Jason Mitchell to stop the kickback scheme.
“Rocket engaged in a kickback scheme that discouraged homebuyers from comparison shopping and getting the best deal,” said CFPB Director Rohit Chopra. “At a time when homeownership feels out of reach for so many, companies should not illegally block competition in ways that drive up the cost of housing.” Sues Walmart, Branch Messenger Also on Dec. 23, CFPB reported that it is suing Walmart Inc. and Branch Messenger Inc. for illegally opening deposit accounts for more than one million delivery drivers through Walmart’s Spark Driver program. The suit alleges that more than $10 million in junk fees were collected after drivers were forced to use costly deposit accounts to get paid.
“The CFPB’s lawsuit alleges that Walmart and Branch opened Branch accounts for Spark Drivers, and Walmart then deposited drivers’ pay into these accounts, without the drivers’ consent,” said the press release. “Walmart told Spark Drivers that they were required to use Branch to get paid and that they would terminate workers who did not want to use these accounts.
“Walmart and Branch also misled workers about the availability of same-day access to their earnings. Drivers had to follow a complex process to access their funds, and when they finally did, they faced further delays or fees if they needed to transfer the money they earned into an account of their choice. This resulted in workers paying more than $10 million in fees to transfer their earnings to an account of their choice.”
Branch is a financial technology company that offers a deposit account at Evolve Bank & Trust that consumers access through a digital app and debit card. Sues banks for allowing Zelle fraud On Dec. 20, CFPB announced a lawsuit against JPMorgan Chase, Bank of America and Wells Fargo for allowing fraud on Zelle, a payment app that allows users to send and receive money between U.S. bank accounts. The suit alleges that Americans have lost hundreds of millions of dollars to fraud due to the peer-topeer payment network’s lax safeguards.
The lawsuit said that Zelle, along with three of its owner banks—Bank of America, JPMorgan Chase and Wells Fargo—rushed the network to market to compete against other growing payment apps such as Venmo and Cash App, without effective consumer safeguards in place. CFPB said customers of the three banks have lost more than $870 million over the network’s seven-year existence.
Customers filed fraud complaints and were largely denied assistance, the filing alleges, and were told to contact the fraudsters directly to recover their money. It also alleged that the three banks failed to properly investigate complaints or provide consumers with legally required reimbursement for fraud and errors. CFPB is seeking to stop the alleged unlawful practices, secure redress and penalties and obtain other relief.
“Zelle became a gold mine for fraudsters while often leaving victims to fend for themselves,” Chopra said. Illegal credit card practices On Dec. 18, CFPB reported it had taken action on baitand- switch credit card rewards tactics. A press release said the bureau has warned law enforcement agencies that some credit card companies are operating rewards programs that may be breaking the law, including illegally devaluing rewards points and airline miles.
New research finds that retail credit cards, which offer store-specific rewards and loyalty programs, charge significantly higher interest rates than traditional cards. In addition, CFPB launched a new tool called Explore Credit Cards, to help consumers find the best credit card rates across both rewards cards and traditional cards.
The tool is located on consumerfinance. gov and is described as a “first-of-its-kind tool that enables consumers to compare more than 500 credit cards using unbiased, comprehensive data,” the press release said.
“Large credit card issuers too often play a shell game to lure people into high-cost cards, boosting their own profits while denying consumers the rewards they’ve earned,” Chopra said. “When credit card issuers promise cashback bonuses or free round-trip airfares, they should actually deliver them. The CFPB is taking aim at bait-and-switch tactics and promoting more competition in credit card markets to protect consumers and give people more choice.”
In May 2024, CFPB and the U.S. Department of Transportation hosted a public hearing about challenges consumers experience and the lack of competition in airline and credit card rewards programs. The bureau has taken action against issuers such as American Express and Bank of America for alleged illegal practices related to the credit card rewards programs.