Bank of America to Pay $250 Million over Junk Fees and Fake Accounts
Government regulators this week ordered Bank of America to pay $250 million for engaging in a string of illegal banking practices that harmed hundreds of thousands of consumers.
The Consumer Financial Protection Bureau (CFPB) accused Bank of America of double-dipping on junk fees, withholding promised credit card rewards, and opening fake credit card accounts. The Office of the Comptroller of the Currency (OCC) also accused Bank of America of illegally charging junk fees. For these violations of consumer financial protection laws, Bank of America will pay $100 million to harmed customers and $150 million in combined penalties to CFPB and OCC.
According to CFPB, Bank of America adopted a policy of charging customers multiple $35 fees for the same declined transactions, a practice known as double-dipping on insufficient funds fees. This unlawful practice generated substantial unearned revenue for the bank. Bank of America also lured customers with enticing offers of cash and points to sign up for credit cards, then allegedly withheld the promised cash and points rewards, denied sign-up bonuses, and failed to honor other rewards promises.
Regulators also found that since 2012, Bank of America employees have misused sensitive customer information to open unauthorized credit card accounts without their knowledge to meet sales-based incentive goals. These unauthorized accounts resulted in unjustified fees to the consumer, negative impacts on consumers’ credit profiles, and the need for a consumer to take corrective action.
In a statement, CFPB stressed that it is focused on stopping these types of schemes across the entire banking industry. CFPB Director Rohit Chopra stated “[t]hese practices are illegal and undermine customer trust. The CFPB will be putting an end to these practices across the banking system.”
Bank of America has been a repeat offender in various illegal banking practices. In 2014, the bank agreed to pay $16.65 billion to resolve federal and state mortgage fraud claims. That same year, the CFPB ordered Bank of America to pay $727 million in redress to its victims for illegal credit card practices. In 2022, the CFPB and OCC fined Bank of America $225 million and required it to pay hundreds of millions of dollars in redress to consumers for botched disbursement of state unemployment benefits at the height of the COVID-19 pandemic.
This latest enforcement action against Bank of America highlights the significance of fair and transparent banking practices. Moving forward, it is essential for financial institutions to prioritize ethical conduct, transparency, and the fair treatment of customers to maintain public confidence in the banking system.
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