Bank of America “will pay more than $250 million in refunds and fines,” reports the Washington Post, “after federal regulators found the company systematically overcharged customers, withheld promised bonuses and opened accounts without customer approval.”
The Consumer Financial Protection Bureau [or CFPB] found the bank made “substantial additional revenue” for years by repeatedly charging customers $35 overdraft fees on the same transaction. The bank also denied cash and points bonuses it had pledged to tens of thousands of credit card customers. And starting in 2012, Bank of America employees enrolled customers in credit card accounts without their approval, obtaining credit reports without permission to complete the applications, the bureau said.
The bureau’s director emphasized that “These practices are illegal and undermine customer trust,” adding that America’s CFPB “will be putting an end to these practices across the banking system.”
The Post points out that Bank of America will now pay more than $100 million in restitution to customers, a $90 million fine to the CFPB and another $60 million fine to the Office of the Comptroller of the Currency. “Bank of America already has refunded customers denied credit card rewards and bonuses, the consumer bureau said. It will be repaying those it overcharged on fees by depositing funds into their account or sending a check…”
But how widespread is hte problem?
Hundreds of thousands of customers were harmed over several years, the consumer agency said. Bank of America is the second largest U.S. bank, with 68 million residential and small business customers… In extra fees alone, the bank charged customers “tens of millions of dollars” between March 2020 and November 2021, federal regulators found. The regulator said Bank of America in that period hit customers with a $35 fee if they had insufficient funds to cover a charge. If the customer still lacked funds when the merchant resubmitted the transaction, the company assessed another $35 penalty… And bank employees opened credit card accounts for customers without their knowledge in a bid to meet individual sales goals, the CFPB said…
[T]he practice has given the banking industry a major black eye in recent years. Wells Fargo reached a $3.7 billion settlement with federal regulators in December over a range of violations, including opening millions of fake accounts. The CFPB fined U.S. Bank $37.5 million last summer over its own sham accounts scandal.
This is not Bank of America’s first brush with federal regulators over its treatment of customers. The CFPB ordered the company to pay $727 million in 2014 over illegal credit card practices. The company paid another $225 million last year in fines over mishandling state unemployment benefits during the pandemic and a separate $10 million civil penalty over unlawful garnishments.
“The company did not admit or deny wrongdoing in its settlement with the agency…” notes the article. But a statement from the chairman of the U.S. Senate Banking Committee said Bank of America “has clearly broken the law in yet another case of Wall Street banks taking Americans’ money to pad their already-massive profits…
“This kind of abuse is why we will continue to hold the big banks accountable, and it’s why we need the Consumer Financial Protection Bureau — so consumers can keep their hard-earned money.”