Regulators on Tuesday ordered Bank of America to pay more than $250 million for doubling up on customer fees, withholding reward bonuses for credit card customers and opening accounts without authorization, according to the Consumer Financial Protection Bureau.
The fine includes more than $100 million to be paid to customers, $90 million in penalties to CFPB and $60 million in penalties to the Office of the Comptroller of the Currency, officials said. As part of the settlement, Bank of America agreed to pay the fines but did not admit to or deny the allegations.
“Bank of America wrongfully withheld credit card rewards, double-dipped on fees, and opened accounts without consent,” CFPB Director Rohit Chopra said in a statement. “These practices are illegal and undermine customer trust.”
These practices are illegal and undermine customer trust. The @CFPB will be putting an end to these practices across the banking system.
— Rohit Chopra (@chopracfpb) July 11, 2023
Officials ordered the bank to stop opening unauthorized accounts, disclose limitations on rewards card bonuses and provide bonuses as advertised. Bank of America has also been prohibited from charging repeated fees for insufficient account funds.
Regulators said the bank had a policy of charging $35 after declining a customer’s transaction due to a lack of funds. Investigators with CFPB determined that until 2022, customers were charged the fees repeatedly for the same transaction.
“Over a period of multiple years, Bank of America generated substantial additional revenue by illegally charging multiple $35 fees,” officials with CFPB said.
Today, the CFPB ordered @BankofAmerica to pay more than $100 million to harmed customers for double-dipping on fees, wrongfully withholding credit card rewards, and opening accounts without consent. https://t.co/Ky44sKYADf
— consumerfinance.gov (@CFPB) July 11, 2023
.@BankofAmerica is a global bank serving 68 million people and small business clients and is the 2nd largest bank in the US. Its illegal actions harmed hundreds of thousands of consumers over a period of several years across multiple product lines and services.
— consumerfinance.gov (@CFPB) July 11, 2023
From January 2012 through February 2021, the bank advertised cash and bonus point offers on its website to entice customers to open credit card accounts. The bank failed, however, to properly note that the bonuses were only available to customers who signed up for accounts online. Customers were also denied sign-up bonuses due to employee errors in the application process, according to CFPB.
Around the same time, from January 2012 through December 2020, Bank of America employees sometimes submitted applications and opened accounts for customers without their consent in order to meet sales goals, regulators said. The goals have since been eliminated.
Bank of America is the nation’s second-largest bank, serving 68 million people and small businesses. The Charlotte, North Carolina-based bank has branches and ATMs in 38 states and the District of Columbia.
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