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If you’re worried about how you would pay your bills if you lost your job or could no longer work, you may have signed up for a “credit protection” plan offered by your credit card company. And if you were concerned about identity theft, you may have signed up for a service to monitor your credit and protect you from identity theft.

But you may not have received the benefits you expected, according to the Consumer Financial Protection Bureau, which announced an enforcement action against Bank of America on Wednesday. It ordered the credit card issuer to pay $727 million in relief to consumers for what it described as illegal credit card practices. This is the largest consumer refund of any CFPB enforcement action to date.

Under the agreement, the bank will issue refunds of $268 million to approximately 1.4 million customer accounts in relation to credit protection products, and an additional $459 million in refunds to around 1.9 million customer accounts for identity protection products. Many customers have already received credits to their accounts, says the bank. In addition, Bank of America said in a statement that it stopped marketing identity theft protection products in December 2011 and credit card debt cancellation products in August 2012.

Sold When Consumers Activated Cards

According to the CFPB, these products were largely sold by telemarketers when customers activated their cards, or through outbound telemarketing. Some made misstatements to consumers about the protection they would get. For example, consumers may have been told the first 30 days of coverage was free, when in fact it wasn’t. Instead, customers had 30 days to cancel and receive reimbursement of their fees. Other customers may have been led to believe they were simply requesting additional information about the product when they actually were being enrolled in the program.

One of the products in question was called “Credit Protection Plus” and, according to the consent order, the last version Bank of America offered would cancel up to twice the customer’s minimum monthly payment for up to 18 months for involuntary unemployment, disability,  hospitalization and leave of absence (each as defined in the product’s terms and conditions); up to three minimum monthly payments for certain defined life events, including marriage, divorce, birth/adoption, new residence, graduation, entering college and retirement; and up to $25,000 of the customer’s balance upon the customer’s death. When last marketed to customers, the monthly fee for this product was 0.85% of the customer’s monthly balance.

The other product, “Credit Protection Deluxe” was a service that was last marketed to consumers as one that would, for a flat fee of $15.99 a month, cancel up to up to $500 per month (for a total of up to $2,000) for involuntary unemployment, disability, hospitalization and leave of absence (each as defined in the product’s terms and conditions), and up to $200 for the same life events covered by Credit Protection Plus.

Even if these types of products are marketed properly, consumer advocates generally don’t recommend them because they provide limited coverage at a relatively steep cost. Using the money you would have paid for one of these services to start an emergency savings account or pay down debt is often a better bet.

The other product involved was an identity protection service that helped consumers receive and monitor their credit reports. Delivering that information required the customer’s written consent, but according to the CFPB, some customers were charged before this process was completed, and some customers were charged without ever receiving the promised benefits.

While there are times when it makes sense to pay for a credit monitoring service, there are ways consumers can monitor their credit for free by obtaining their credit reports for free once each year and using a free service like Credit.com to monitor their credit scores each month.

The CFPB says this is the fifth action they have taken against credit add-on products. Previous actions involved products offered by Capital One, Discover, Chase and American Express.

Consumer complaints are one way the Consumer Financial Protection Bureau identifies problems it needs to investigate. If you have a problem with a credit card issuer, debt collector, credit reporting agency or student loan servicer that you can’t satisfactorily resolve it yourself, you may want to file a complaint with the Consumer Financial Protection Bureau.

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