Bank of America, the second largest U.S. bank by assets, engaged in illegal practices that effected hundreds of thousands of its customers in recent years, the CPFB (Consumer Financial Protection Bureau) said Tuesday.
Bank of America will need to refund $100 million to customers, pay $90 million in penalties to the Consumer Financial Protection Bureau and $60 million to the Office of the Comptroller of the Currency. “Bank of America wrongfully withheld credit card rewards, double-dipped on fees by charging multiple $35 overdraft fees for the same transaction and opened accounts without consent,” said CFPB Director Rohit Chopra, in a statement. “These practices are illegal and undermine customer trust.”
It is one of the highest financial penalties in years against Bank of America, which has largely spent the last 15 years trying to clean up its reputation and market itself to the public as a bank focused on financial health and not on overdraft fee income.
The CFPB also found that, since at least 2012, Bank of America employees illegally applied for and enrolled consumers in credit card accounts without their knowledge or authorization. It is a similar charge that was made against Wells Fargo, which paid billions in fines after it was determined that the San Francisco bank opened millions of unauthorized bank accounts in order to meet unrealistic sales goals.
In 2014 the CFPB ordered Bank of America to pay $727 million for illegal credit card practices. Last year it was ordered to pay a $10 million civil penalty over unlawful garnishments. Also in 2022, the CFPB and OCC fined Bank of America $225 million and required it 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.
Bank of America spokesman Bill Halldin said in a response the lender “voluntarily reduced overdraft fees and eliminated all non-sufficient fund fees in the first half of 2022,” resulting in a 90% drop in revenue from those fees.
The announcement Tuesday is the latest sign that some of the practices exposed by the Wells Fargo fake accounts scandal in 2016 weren’t confined to that bank.
Regulators have punished Wells Fargo for a sales culture that led to the creation of 3.5 million fake accounts. But other lenders have had similar lapses, including U.S. Bank, which paid a $37.5 million fine last year for putting customers into unauthorized accounts.
