Bank of America (BofA) and business insurance specialist QBE Insurance have reportedly agreed to reimburse $228m to settle the lawsuit that they were engaged in force-placed insurance selling to homeowners.
The recent settlement covers BofA customers who were wrongfully charged for force-placed insurance between January 2008 and February 2014.
A court filing was cited by Reuters as saying that the settlement was signed in Miami federal court wherein both firms were accused for executing a kickback scheme thereby increasing the cost of insurance that homeowners were forced to purchase.
The case, which was filed in 2012, accused the banks of misusing the right of charging insurance premium from homeowners to protect their interest in a property when a homeowner’s insurance has lapsed.
The lawsuit claimed that the bank bypassed onto homeowners the costs they received from insurance providers.
Both BofA and QBE were charged for violating state and federal laws, such as the US Racketeer Influenced and Corrupt Organizations Act (RICO).
Bank of America spokesman Richard Simon was quoted by the news agency as saying, "Bank of America believes that its lender-placed hazard insurance practices comply fully with state and federal law.
"Nevertheless, in order to put an end to this litigation, we have reached a settlement that is acceptable to all parties."
Most recently media sources reported that BofA was engaged in negotiations with the US Consumer Financial Protection Bureau (CFPB) to pay nearly $800m, to settle a probe into its malpractices for driving customers to sign up for extra credit-card products.
Image: BofA, QBE agree to pay $228m to settle force-placed insurance case. Photo: courtesy of Salvatore Vuono.