On Tuesday, the Consumer Financial Protection Bureau (CFPB) announced that Bank of America will be fined and required to compensate customers who had been harmed by the bank’s illegal and deceptive activities.
The Consumer Financial Protection Bureau (CFPB) has demanded that Bank of America pay more than $100 million to its customers for a series of illegal banking practices that include double-charging insufficient funds fees, withholding promised credit card rewards, and unauthorized opening of accounts using sensitive customer data.
In addition to the CFPB’s order, the Office of the Comptroller of the Currency (OCC) has deemed the bank’s double-dipping on fees as “illegal.” Consequently, the bank will be required to pay $90 million in penalties to the CFPB and an additional $60 million to the OCC.
“Bank of America wrongfully withheld credit card rewards, double-dipped on fees, and opened accounts without consent,” said CFPB Director Rohit Chopra. “These practices are illegal and undermine customer trust. The CFPB will be putting an end to these practices across the banking system.”
According to the statement released by CFPB, the illegal practices imposed by Bank of America affected hundreds of thousands of consumers over several years and across multiple product lines and services. Specifically, Bank of America:
- Deployed a double-dipping scheme to harvest junk fees: Bank of America had a policy of charging customers $35 after the bank declined a transaction because the customer did not have enough funds in their account. The CFPB’s investigation found that Bank of America double-dipped by allowing fees to be repeatedly charged for the same transaction. Over a period of multiple years, Bank of America generated substantial additional revenue by illegally charging multiple $35 fees.
- Withheld cash and points rewards on credit cards: To compete with other credit card companies, Bank of America targeted individuals with special offers of cash and points when signing up for a credit card. Bank of America illegally withheld promised credit card account bonuses, such as cash rewards or bonus points, to tens of thousands of consumers. The bank failed to honor rewards promises for consumers who submitted in-person or over-the-phone applications. The bank also denied sign-up bonuses to consumers due to the failure of Bank of America’s business processes and systems.
- Misused Sensitive Customer Information to Open Unauthorized Accounts: From at least 2012, in order to reach now disbanded sales-based incentive goals and evaluation criteria, Bank of America employees illegally applied for and enrolled consumers in credit card accounts without consumers’ knowledge or authorization. In those cases, Bank of America illegally used or obtained consumers’ credit reports, without their permission, to complete applications. Because of Bank of America’s actions, consumers were charged unjustified fees, suffered negative effects to their credit profiles, and had to spend time correcting errors.
More from CFPB:
Under the Consumer Financial Protection Act, the CFPB has the authority to take action against institutions violating consumer financial protection laws. Bank of America’s practices violated the Act’s prohibition on unfair and deceptive acts or practices. Bank of America also violated the Fair Credit Reporting Act by using or obtaining consumer reports without a permissible purpose in connection with unauthorized credit cards, as well as the Truth in Lending Act and its implementing Regulation Z, by issuing credit cards to consumers without their knowledge or consent.
The CFPB’s orders require Bank of America to:
- Stop its repeat offenses: Under the terms of today’s orders, Bank of America must stop opening unauthorized accounts, and the bank must disclose material limitations on any rewards cards bonuses and provide bonuses as advertised. Additionally, while Bank of America has generally reduced its reliance on junk fees, the bank is also strictly prohibited from charging repeat non-sufficient funds fees in the future.
- Pay redress to harmed consumers: The orders require Bank of America to compensate consumers charged unlawful non-sufficient funds fees and who have not already been made whole by the bank, totaling approximately $80.4 million in consumer redress. The bank must also compensate consumers who incurred costs stemming from the unauthorized opening of new credit card accounts, and any customers improperly denied bonuses whom the bank has not already made whole. The bank previously paid around $23 million to consumers who were denied rewards bonuses.
- Pay $90 million in penalties to the CFPB: Bank of America will pay a $60 million penalty to the CFPB for charging repeat non-sufficient funds fees, and a $30 million penalty to the CFPB for its credit card rewards practices and for opening unauthorized accounts. The penalties will be deposited into the CFPB’s victims relief fund. Separately, Bank of America will also pay a $60 million penalty to the OCC for its double-dipping fee practices.
This story originally appeared on TheGateWayPundit
