Federal authorities announced on Tuesday, July 11, that Bank of America violated numerous consumer financial protection rules by double-charging customers, not distributing credit card rewards, and creating fraudulent accounts.
As a result, the Consumer Financial Protection Bureau (CFPB) fined Bank of America $90 million and compelled the institution to pay more than $100 million to customers.
The Office of the Comptroller of the Currency fined Bank of America $60 million.
Some of the accusations are reminiscent of the Wells Fargo debacle from a decade ago, which involved the creation of millions of unauthorized consumer bank accounts.
“Bank of America wrongfully withheld credit card rewards, double-dipped on fees, and opened accounts without consent,” stated CFPB Director Rohit Chopra.
In addition to being illegal, the methods also damaged credibility with the public, regulators stated.
The CFPB vowed to end the banking practices nationwide.
The bank boasts 68 million customers, making it the second largest in the country.
Following the CFPB investigation, Bank of America was found to have “harmed hundreds of thousands of consumers over a period of several years and across multiple product lines and services,” regulators asserted.
Customers were charged “tens of millions of dollars in fees on resubmitted transactions,” after the bank allowed consumers to be “repeatedly charged” $35 each time a transaction was resubmitted after being declined due to insufficient funds.
This happened even if the third-party merchant resubmitted the charge to the customer’s account after the first attempt was refused.
If the customer’s account has insufficient funds or an overdraft, they were charged an additional $35.
The bank’s statements were vague about the possibility of several fees arising from a single transaction, regulators stated.
“Clients had no way of knowing if or when a merchant would resubmit a transaction to the bank for payment, making it unreasonable for them to avoid being charged multiple times for the same transaction,” investigators stated.
The CFPB also claimed that the bank improperly withheld bonuses from tens of thousands of clients despite having made special offers of cash and points when signing up new credit card customers.
The agency also claimed that beginning in 2012, bank workers “illegally applied for and enrolled consumers in credit card accounts without consumers’ knowledge or authorization” to meet now-defunct sales-based incentive goals and raise their ratings.
As a result, clients were penalized with unauthorized fees, saw negative marks on their credit reports, and had to take extra steps to rectify the bank’s mistakes after it used or obtained their credit reports without their permission.
For those infractions, Bank of America must pay over $250 million to government authorities and affected consumers.
This isn’t the first time the bank has faced penalties from the government.
The CFPB also ordered the bank to pay $727 million to settle consumer complaints over unfair credit card practices in 2014.
Further, Bank of America was fined $10 million for wrongful garnishments last year and another $225 million for “botched disbursement of state unemployment benefits at the height of the COVID-19 pandemic.”