Introduction:
Bank of America has been ordered by federal regulators to pay a sum exceeding $100 million to customers as a result of engaging in illegal practices such as charging unauthorized fees, withholding credit card rewards, and opening fraudulent accounts. The Consumer Financial Protection Bureau (CFPB) has directed the bank to pay an additional $90 million in penalties to the CFPB itself, as well as $60 million to the Office of the Comptroller of the Currency.
Read More: Unauthorized Fee Charging
The CFPB has accused Bank of America of causing harm to hundreds of thousands of consumers over an extended period by imposing fees twice on customers with insufficient funds. The Office of the Comptroller of the Currency has deemed this practice illegal.
Controversy on Overdraft Fees:
Traditionally, the bank charged a $35 fee when a transaction was declined due to insufficient funds. However, the CFPB alleges that Bank of America allowed for multiple fees to be charged for the same transaction, resulting in customers being subjected to numerous $35 fees.
Read Also: Bank of America has stated that it has ceased charging the extra fee for the past 18 months. The bank has also eliminated all fees, except for the overdraft fee, which has been reduced to $10 as of 2022. Consequently, revenue garnered from these fees has plummeted by more than 90%.
Withholding of Credit Card Rewards:
Additionally, the CFPB has accused the bank of unlawfully withholding credit card bonuses that were promised to tens of thousands of customers who had applied either over the phone or in person. The bank has also been accused of enrolling customers in credit card accounts without their consent or knowledge since at least 2012.
Unauthorized Use of Consumer Credit Reports:
Allegedly, Bank of America employees misused consumers’ credit reports without consent in order to complete credit card applications. This has resulted in unjustified fees, negative impacts on credit profiles, and consumers having to expend effort to rectify these errors.
Bank of America’s Response:
Bank of America serves a customer base of 68 million individuals and small businesses. In response to the allegations, the bank has claimed that it voluntarily reduced overdraft fees and eliminated non-sufficient fund fees in the first half of 2022. According to the bank, there has been a significant decline in revenue generated from these fees as a result of these changes.
Conclusion:
The order compelling Bank of America to pay over $100 million in restitution and penalties sheds light on the illicit practices related to unauthorized fees, withholding of credit card rewards, and the opening of unapproved accounts. Despite the bank’s efforts to address these issues, this regulatory action underscores the vital need for fair and transparent practices within the financial industry.
Read Next: “New Measures to Safeguard Consumer Rights in the Banking Sector”