The Consumer Financial Protection Bureau (CFPB) has ordered Bank of America to pay more than $100m to customers. According to the CFPB, the bank systematically double-dipped on fees imposed on customers with insufficient funds in their account. In addition, the bank withheld reward bonuses explicitly promised to credit card customers, and misappropriated sensitive personal information to open accounts without customer knowledge or authorisation.
The Office of the Comptroller of the Currency (OCC) also found that the bank’s double-dipping on fees was illegal. Bank of America will pay a total of $90m in penalties to the CFPB. In addition, it will pay $60m in penalties to the OCC.
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“Bank of America wrongfully withheld credit card rewards, double-dipped on fees, and opened accounts without consent. These practices are illegal and undermine customer trust. The CFPB will be putting an end to these practices across the banking system,” said CFPB Director Rohit Chopra
Bank of America harmed hundreds of thousands of consumers over a period of several years said the CFPB. This occurred across multiple product lines and services.
Specifically, Bank of America deployed a double-dipping scheme to harvest junk fees. It charged customers $35 after the bank declined a transaction because the customer had insufficient funds in their account. The CFPB’s investigation found that Bank of America double-dipped by allowing fees to be repeatedly charged for the same transaction. Over a period of multiple years, Bank of America generated substantial additional revenue by illegally charging multiple $35 fees.
Bank of America withheld cash and points rewards on credit cards
Bank of America targeted individuals with special offers of cash and points when signing up for a credit card. It illegally withheld promised credit card account bonuses. Examples include cash rewards and bonus points, to tens of thousands of consumers. The bank failed to honour rewards promises for consumers who submitted in-person or over-the-phone applications. The bank also denied sign-up bonuses to consumers due to the failure of Bank of America’s business processes and systems.
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By GlobalDataMisuse of sensitive customer information to open unauthorised accounts
From at least 2012, in order to reach now disbanded sales-based incentive goals and evaluation criteria, Bank of America employees illegally applied for and enrolled consumers in credit card accounts without consumers’ knowledge or authorisation. In those cases, Bank of America illegally used or obtained consumers’ credit reports, without their permission, to complete applications. Because of Bank of America’s actions, consumers were charged unjustified fees. In addition, customers suffered negative effects to their credit profiles, and had to spend time correcting errors.
In 2014, the CFPB ordered Bank of America to pay $727m in redress to its victims for illegal credit card practices. In May 2022, the CFPB ordered Bank of America to pay a $10m civil penalty over unlawful garnishments. And in 2022, the CFPB and OCC fined Bank of America $225m. The bank also had 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.
