Brazil to investigate lenders in credit card ‘fraud’ case


Some 23 financial institutions, including the largest banks in the South American country, will be investigated over payday loan withdrawals allegedly charged by unsolicited credit cards.

Nubank denies offering such a product, adding that it is not licensed to do so. (Reuters archive)

The Brazilian government has announced it will investigate 23 financial institutions, including the country’s largest banks, for allegedly issuing unsolicited credit cards when customers took out payday loans and charged them undisclosed fees .

The Department of Justice and Public Safety said in a statement Thursday that lenders are providing customers with credit cards without notice when taking out these loans, which are repaid by direct debit from the borrower’s paycheck.

The investigation follows complaints from a Rio de Janeiro state consumer protection agency, he added, saying payday loan withdrawals were allegedly billed via unsolicited credit cards .

Those under investigation include Banco Bradesco SA, Itaucard d’Itau Unibanco Holding SA, Banco Pan SA, Nubank, Banco Santander Brasil SA and state-controlled lenders Banco do Brasil SA and Caixa Economica Federal. .

Lenders deny allegations

Brazilian banking lobby group Febraban said in a note that of the 23 institutions mentioned in the survey, only seven are licensed to provide payday loans.

Itau said in a statement to Reuters news agency that he does not operate credit cards through payroll-related loans and that he would provide any further clarification requested by the Brazilian Ministry of Justice and Public security.

Public lender Banco do Brasil said that “it has not issued salary credit cards for four years and is at the disposal of the authorities for further clarification”.

Santander Brazil said it learned of the investigation from the media and was not contacted by authorities. It added that “all its products and services comply with the regulations and that it is at the disposal of the competent authorities to provide clarifications”.

Nubank also denied offering such a product, adding that it was not authorized to do so.

Banco Pan said it was in contact with the authorities to obtain official information and “strengthens its position of respect for customers and its commitment to the fight against fraud”.

Bradesco declined to comment, while Caixa did not respond to requests for comment.

Source: Reuters

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