WASHINGTON (10/1/14)--Merrick Bank has settled with the Federal Deposit Insurance Corp. (FDIC) for alleged unfair and deceptive practices related to marketing and servicing of credit card add-on products. The FDIC order, announced Tuesday, requires the bank to pay a civil money penalty of $1.1 million and restitution of approximately $15 million to affected consumers.
According to the FDIC, the South Jordan, Utah-based bank marketed a payment protection credit card add-on product that was sold from 2008 to 2013 to consumers who had a bank credit card. The product, called the PAYS Plan, provided a benefit payment toward a consumer's monthly credit card payment following certain life events, such as involuntary unemployment, disability and hospitalization.
The FDIC determined Merrick Bank violated federal law prohibiting unfair and deceptive practices by:
These actions violated Section 5 of the Federal Trade Commission Act and were discovered by an FDIC review of the bank's credit card products.
Use the resource link below to access the full consent order.