The US Federal Depository Insurance Corporation has punished Comenity Bank of Wilmington in Delaware and Comenity Capital Bank of Salt Lake City in Utah for deceptive practices related to the marketing and servicing of credit card "add-on products," in breach of s5 Federal Trade Commission Act.

The banks are both wholly-owned subsidiaries of Comenity LLC of Columbus in Ohio. As part of the settlement, each of the banks submitted to a consent order and other court orders. Under these, Comenity Bank will pay a civil money penalty of $2 million and provide restitution of approximately $53 million to harmed consumers. Comenity Capital Bank will pay a penalty of $450,000 and provide restitution of approximately $8.5 million to harmed consumers.

The banks offer credit cards through various retailers nationwide that are typically co-branded with these retailers. For these cards, the banks offer "Account Assure" and "Account Assure Pro," which are payment protection/debt cancellation add-on products to the credit cards. The products allow consumers who enrol to ask for certain benefit payments following specific life events including disability.

The FDIC says that the banks broke s5 by doing the following.

• Telling consumers that they would not be charged a fee for the products if their accounts had no balances, but nonetheless charging fees.
• Making significant misrepresentations and omissions regarding the refund process applicable to consumers' cancellations of the products within the first 30 days of enrollment.
• Misrepresenting the conditions for receipt of the gift cards or account statement credits offered as incentives for enrolling in the products.

The FDIC orders, in part, require the banks to correct their illegalities, ensure future compliance with s5 and develop and implement comprehensive restitution plans for all consumers who were affected. The misconduct occurred between January 2008 and September 2014.