NEW YORK (AP) — Bank of America will reimburse its customers more than $100 million and pay $150 million in penalties for “double cutting” overdraft fees, withholding award bonuses on credit cards and closing accounts without the consent of the customers have opened.
Combined, these are one of the largest fines in years against Bank of America, which for most of the past 15 years has sought to improve its reputation and present itself to the public as a bank focused on financial health, not revenue Focused overdraft fees and financial tricks.
BofA must reimburse customers $100 million, 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 has unfairly withheld credit card rewards, double-charged fees and opened accounts without consent,” CFPB Director Rohit Chopra said in a statement. “These practices are illegal and undermine customer trust.”
Backed by a broad mandate from the White House, Chopra and the bureau have argued strongly over the past year junk fees ” – Fees billed to Americans and often seen as unnecessary or exploitative by banks, collection agencies, airlines and concert halls. Banks such as BofA, JPMorgan Chase, Wells Fargo and others were a target of the bureau under the Biden administration.
Part of the fines and penalties stem from Bank of America charging its customers $35 after the bank declined a transaction because the customer did not have enough funds in their account, according to the CFPB. The agency found that the bank made a double mistake by allowing it to charge fees repeatedly for the same transaction.
The fees often accrued when customers processed routine monthly transactions, such as a gym membership. If a customer’s balance was too low to cover the transaction, the transaction would be declined and BofA would charge the customer a $35 fee. The company, which was not paid, frequently debited the customer’s account, resulting in another $35 fee for insufficient funds.
The bank stopped this practice last year but is still required to pay back customers who were charged before the policy change.
BofA has reduced its reliance on overdraft revenue for more than a decade, and last year it reduced overdraft fees to $15. Bank CEO and chairman Brian Moynihan told The Associated Press in 2022 that under these new guidelines Overdraft fee revenue decreased by 90% compared to 2021. The bank said it voluntarily reduced overdraft fees and eliminated all underfunding fees in the first half of last year.
Bank of America also offered cash rewards and bonus points to people when they signed up for a card, but the CFPB said the bank unlawfully withheld promised credit card account bonuses.
The CFPB also found that Bank of America employees have been illegally applying for and registering consumer credit card accounts without their knowledge or authorization since at least 2012. It is a similar but lesser charge against Wells Fargo, which paid billions in fines after it found that the San Francisco Bank Millions of unauthorized bank accounts opened to achieve unrealistic sales targets.
In 2014, the CFPB ordered Bank of America to pay $727 million for illegal credit card practices. Last year, the company was fined $10 million in civil penalties for unlawful garnishments. Also in 2022, the CFPB and OCC fined Bank of America $225 million and ordered it to pay hundreds of millions of dollars in reparation to consumers for botched federal unemployment benefit payments at the height of COVID -19 pandemic.