Bank of America (BAC) has been accused of engaging in illegal practices that harm customers, including charging excessive fees, withholding credit card rewards, and opening unauthorized accounts. These violations of consumer financial protection laws have resulted in significant penalties for the bank.
The Consumer Financial Protection Bureau (CFPB) has ordered Bank of America to pay over $100 million in restitution to customers and $90 million in penalties. Additionally, the Office of the Comptroller of the Currency (OCC) has levied $60 million in fines against the bank. These actions come as a blow to Bank of America, the second-largest bank in the United States, serving millions of individuals and small businesses.
The charges against Bank of America bear similarities to the infamous Wells Fargo scandal of the previous decade, in which millions of unauthorized bank accounts were opened.
The regulatory bodies found that Bank of America had harmed hundreds of thousands of consumers over several years and across various product lines and services. One of the notable violations was the bank repeatedly charging customers fees for the same transaction when it was resubmitted by a third-party merchant. This practice resulted in customers being charged substantial amounts in fees, without clear disclosure from the bank.
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Bank of America has claimed that these fees were eliminated last year, stating, “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 percent.”
The bank also failed to deliver promised bonuses to tens of thousands of credit card customers and engaged in unauthorized credit card enrollment to meet sales-based incentive goals. These actions led to unjustified fees, negative impacts on credit reports, and the need for customers to rectify the errors made by the bank.
Customers eligible for payment due to the violations do not need to take any action. Bank of America is responsible for distributing the payments to eligible individuals, either through deposit accounts or by issuing checks. The CFPB will provide contact information for further consumer inquiries on its website later this month.
