Bank of America Ordered to Pay $250 Million in Penalties and Restitution
The Consumer Financial Protection Bureau (CFPB) has ordered Bank of America to pay more than $250 million in penalties and restitution to customers.
The move comes in response to the bank’s “systematically double-dipping” on fees imposed on customers with insufficient funds, failure to pay reward bonuses explicitly promised to credit card customers, and unauthorized opening of accounts with customers’ sensitive personal information, the CFPB said in a Tuesday (July 11) press release.
“These practices are illegal and undermine customer trust,” CFPB Director Rohit Chopra said in the release. “The CFPB will be putting an end to these practices across the banking system.”
Reached for comment by PYMNTS, a Bank of America spokesperson said in an email that the firm no longer charges the fees addressed by the CFPB.
“We voluntarily reduced overdraft fees and eliminated all non-sufficient fund fees in the first half of 2022,” the bank said in a statement. “As a result of these industry leading changes, revenue from these fees has dropped more than 90%.”
The changes began in 2010 and have included the elimination of fees and the rollout of overdraft protection, the bank said in January 2022.
Bank of America has been assigned a $90 million penalty to the CFPB and a $60 million penalty to the Office of the Comptroller of the Currency (OCC), according to the CFPB press release. The bank has also been ordered to pay more than $100 million to customers.
The CFPB found that Bank of America had a policy of charging customers $35 for declined transactions due to lack of funds, followed by a “double-dipping” of fees repeatedly charged for that same transaction, the release said.
In addition, the investigation discovered tens of thousands of customers were denied promised credit card account bonuses, such as cash rewards or bonus points, even though they had met the requirements of the program, per the release. It also found that Bank of America employees opened unauthorized accounts to meet sales-based incentive goals that have since been eliminated.
The terms of the CFPB’s order also require that Bank of America must now stop the opening of unauthorized accounts, disclose all material reward card bonus limitations and provide bonuses as advertised, according to the release.
The CFPB reported in May that banks’ revenue from overdraft fees fell by roughly 48% as measured in the fourth quarter of 2022 compared to the same period before the pandemic.
The falloff came as several of the largest banking players, including Bank of America, took steps to end those fees.
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