Federal regulators took enforcement action against Bank of America for practices that were deemed harmful to consumers, InvestmentNews reports.
The Consumer Financial Protection Bureau (CFPB) accused Bank of America of double-dipping on fees imposed on customers with insufficient funds in their account, withholding reward bonuses that were promised to credit card customers, and misappropriating sensitive personal information to open accounts without customer knowledge or authorization.
The company was ordered to pay a total of $90 million in penalties to the CFPB and $60 million in penalties to the Office of the Comptroller of the Currency. Bank of America will also pay over $100 million to the hundreds of thousands of customers who were determined to have been affected over a period of several years.
“Bank of America wrongfully withheld credit card rewards, double-dipped on fees, and opened accounts without consent,” said CFPB Director Rohit Chopra. “These practices are illegal and undermine customer trust. The CFPB will be putting an end to these practices across the banking system.”
According to the consumer agency, Bank of America had a policy of charging customers $35 after the bank declined a transaction because the customer did not have enough funds in their account. The investigation found that Bank of America double-dipped by allowing fees to be repeatedly charged for the same transaction. The multiple $35 fees brought substantial additional revenue over several years.
Bank of America no longer charges the fees involved in the case, the company said in a statement. “We voluntarily reduced overdraft fees and eliminated all non-sufficient fund fees in the first half of 2022. As a result of these industry leading changes, revenue from these fees has dropped more than 90%.”
The CFPB’s probe also determined that Bank of America employees illegally applied for and enrolled consumers in credit card accounts without consumers’ knowledge or authorization and used the consumers’ credit reports to complete applications without their permission. Because of this, consumers were charged unjustified fees, suffered negative effects to their credit profiles, and had to spend time correcting errors.
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