- Bank of America ordered to pay $150 million in penalties for unauthorized credit card openings
- Bank “double-dipped” customer fees and withheld promised bonuses
- Customers to receive refunds worth over $80 million, bank accused of unjustified fees
Bank of America has been ordered to pay $150 million (£116 million) in penalties for opening credit cards without customers’ permission.
In addition, regulators discovered that the bank “double-dipped” customer fees and withheld promised incentive bonuses.
In some cases, the violations at the second-largest bank in the United States trace back to 2012, according to regulators.
Bank of America has neither acknowledged nor denied the findings of the investigation.
The bank has been ordered to compensate customers and pay the Consumer Financial Protection Bureau (CFPB) and Office of the Comptroller of the Currency (OCC) a total of $150 million in penalties.
The CFPB expects customer refunds to be worth more than $80 million.
Bank of America, according to the regulator, illegally applied for and enrolled consumers in credit card accounts without their knowledge or consent to help bank employees meet sales incentive objectives.
The CFPB stated that customers were charged unjustified fees and that their credit profiles suffered as a result.
Bank of America is also accused of charging fees twice when a customer’s account contained insufficient funds.
When a transaction was declined, customers were charged $35. However, Bank of America permitted multiple fees to be assessed for the same transaction.
Since discontinuing the $35 fee for insufficient funds, the lender has also reduced overdraft fees.
In January 2023, Bank of America discontinued credit card sales objectives for three years.
Director of the Consumer Financial Protection Bureau Rohit Chopra stated, “Bank of America improperly withheld credit card rewards, double-dipped on fees, and opened accounts without consent.
“These practices are unlawful and erode customer confidence. The CFPB will halt these practices across the entire banking system.”
President Joe Biden has promised to push down on “junk fees” charged by corporations, including airlines and concert ticket sellers.
He wants Congress to abolish early mobile phone and pay TV contract termination costs.
Under his direction, the CFPB solicited consumer complaints about overdraft fees and other bank expenses in 2022.
Many banks, including Bank of America, proactively eliminated or reduced the fees, according to the White House, resulting in annual savings for the public of more than $5 billion.
Bank of America’s overdraft and insufficient funds fees reduced by 90% in 2022.
In 2014, the bank was fined $20 million and ordered to pay customers over $700 million for deceptive marketing and unlawful charges related to its credit cards. It was also ordered to pay $225 million in penalties for improperly distributing unemployment benefits last year.
