(CN) – Bank of America conspired with “predatory expert” Intersections Inc. and AIG to make tens of millions of dollars by coercing poor, Hispanic depositors to authorize automated withdrawals for purported insurance policies, whose benefits are so paltry they are “almost a joke,” and whose real purpose is to fatten the bank’s coffers, according to a RICO class action in Houston Federal Court.
The insurance coverage provided is “a pitiful excuse for insurance protection,” and the “amounts that supposedly will be paid are small, and the conditions to their being paid at all are highly unlikely to ever occur,” according to the complaint.
The class claims that since 2006 Bank of America has profiled its customer-victims, disclosed their confidential information to Intersections, and in turn received “almost $45 million out of the checking account deposits of its poorest customers.”
Lead plaintiff Jorge Gonzalez, a native of Mexico who has limited education and English language skills, says he was a typical victim of the scam.
The class claims that when someone who fits Gonzalez’s profile opens a Bank of America checking account, the bank sends the customer profile and deposit information to Intersections, “a predatory expert” whose main goal is to “increase the (bank’s) bottom line.”
Intersections hires a telemarketing company with native Spanish speakers, who call the BofA customers, claiming to represent the bank, to persuade them “to authorize, over the phone, the purchase of some form of insurance, usually … accidental death or disability,” the complaint states.
Once the telemarketer receives an OK from the customer, Intersections begins taking a “so-called ‘premium'” out of their checking account, under the name “Smart Step,” according to the complaint.
“Most of those withdrawals are divided among Bank of America, Intersections, and the telemarketing firm that made the first call,” and a small amount goes toward an insurance premium, the complaint states.
Intersections “derived over $236 million in revenues in 2007 and over $361 million in revenues in 2008,” which does not include what was paid to AIG or its subsidiary, according to the complaint.
The class claims that the insurance customers get is “almost a joke.” The “victims are not even direct beneficiaries of any insurance policy,” and the policy is terminable if the customer closes their BofA account, the class claims.
Bank of America’s “privacy” policy deceptively states that it does not share customers’ confidential information with marketers, but that it will share information with companies that work for Bank of America, in order to better meet customers’ needs, according to the complaint.
The entire scheme “is structured so the victims can never figure out what is going on,” the complaint states.
Defendants include Bank of America, Bank of America Insurance Services, BA Insurance Services, Intersections, Intersections Insurance Services, Loeb Holding, Global Contact Services, American International Group, and National Union Fire Insurance Company of Pittsburgh.
The class seeks punitive damages for fraud, breach of contract, unjust enrichment and breach of fiduciary duties. Its lead counsel is Kenneth Wynne.