Bank of America has been ordered to pay more than $100 million in reimbursements to customers and $150 million in fines for engaging in illegal practices, including double-dipping on overdraft fees, withholding credit card rewards, and opening accounts without customer consent. This is one of the largest financial penalties imposed on the bank in recent years.
The Consumer Financial Protection Bureau (CFPB) has directed Bank of America to refund $100 million to affected customers and pay $90 million in penalties to the agency, along with another $60 million to the Office of the Comptroller of the Currency. The CFPB stated that the bank wrongfully withheld credit card rewards, charged fees twice for the same transaction, and opened accounts without obtaining proper authorization, all of which are illegal practices that undermine customer trust.
According to the CFPB, Bank of America had a policy of charging customers $35 when a transaction was declined due to insufficient funds in their account. However, the bank allegedly double-dipped by charging fees repeatedly for the same transaction. In recent years, the bank has been trying to reduce its reliance on overdraft fee income, and it lowered its overdraft fee to $15 last year. Bank of America claimed that under its new policies, overdraft fee income had decreased by 90% compared to the previous year.
In addition to the overdraft fee issue, the CFPB found that Bank of America also failed to deliver promised credit card account bonuses to customers and, since at least 2012, employees had illegally enrolled consumers in credit card accounts without their knowledge or consent. This is similar to the fraudulent account opening scandal that Wells Fargo faced, resulting in heavy fines. In 2014, Bank of America was ordered to pay $727 million for illegal credit card practices. Last year, the bank was fined $10 million for unlawful garnishments.
It is worth mentioning that in 2022, the CFPB and the Office of the Comptroller of the Currency fined Bank of America $225 million for mishandling the distribution of state unemployment benefits during the COVID-19 pandemic.
Bank of America has been striving to enhance its reputation and position itself as a bank focused on financial health rather than profiting from overdraft fees. The bank voluntarily reduced overdraft fees and eliminated non-sufficient fund fees in the first half of last year, demonstrating its commitment to customer satisfaction.
The recent penalties imposed on Bank of America highlight the importance of adhering to ethical practices and maintaining customer trust. The bank now faces significant financial consequences for its illegal actions. By reimbursing affected customers and paying substantial fines, Bank of America must work harder to rebuild its reputation and regain public trust.
Overall, the penalties imposed on Bank of America serve as a reminder to all financial institutions that engaging in illegal practices can lead to severe consequences. The CFPB’s actions demonstrate a commitment to protecting consumers from unfair and deceptive practices in the banking industry. Bank of America must learn from this experience and prioritize transparent and customer-centric practices to restore its image as a trustworthy financial institution.
